In a move that consolidates the most ambitious corners of his business empire, Elon Musk announced late Monday that SpaceX has officially acquired xAI. The deal, valued at a staggering $250 billion, effectively merges the world’s leading aerospace manufacturer with Musk’s fast-growing artificial intelligence venture, creating a private-sector titan with a combined valuation of $1.25 trillion.
Analysts describe the acquisition as the largest M&A deal involving a private target in history. It brings together SpaceX’s Starlink satellite constellation, the Starship launch system, and xAI’s “Grok” AI models under a single corporate umbrella. Notably, because xAI acquired the social media platform X (formerly Twitter) in early 2025, the deal also places the social network within the SpaceX ecosystem.
The Vision: “Orbital Data Centres”
In a memo published on the SpaceX website titled “xAI Joins SpaceX to Accelerate Humanity’s Future,” Musk outlined a radical justification for the merger: moving AI compute into space.
Musk argued that the energy and cooling demands of next-generation AI are becoming unsustainable on Earth. His solution? A constellation of up to one million satellites acting as orbital data centres, powered by near-constant solar energy.
“Within 2 to 3 years, the lowest cost way to generate AI compute will be in space,” Musk wrote. “This marks the next book in our mission: scaling to make a sentient sun to understand the universe and extend the light of consciousness to the stars.”
Financial & Strategic Impact
The merger is widely viewed as a “flight to quality” among xAI investors, offering them shares in the highly profitable SpaceX.
| Metric | Details |
| Combined Valuation | Approximately $1.25 Trillion |
| xAI Purchase Price | $250 Billion |
| Exchange Ratio | 0.1433 SpaceX shares per xAI share |
| Key Objective | Launching orbital AI infrastructure via Starship |
| Anticipated IPO | Planned for June 2026 (Est. $1.5T+ valuation) |
By integrating the two companies, Musk effectively creates a “full-stack” technology powerhouse. SpaceX provides the transport (Starship), the network (Starlink), and now the intelligence (Grok) to power everything from autonomous Mars colonies to global direct-to-mobile AI services.
Regulatory and Ethical Hurdles
The deal is expected to face intense scrutiny. SpaceX holds billions in contracts with NASA and the Department of Defence, and the integration of a massive social media platform (X) and a frontier AI (Grok) into a defence contractor’s balance sheet raises unprecedented questions regarding data privacy, national security, and antitrust.
Critics also point to the “Muskonomy” — the increasingly blurred lines between Musk’s companies. With Tesla having recently invested $2 billion in xAI, Tesla shareholders are now indirect owners of a stake in SpaceX, further complicating the fiduciary landscape.
What Happens Next?
SpaceX has already filed with the FCC for authorisation to begin testing its first “compute satellites.” As the company gears up for a rumoured $50 billion IPO in June, all eyes will be on the next Starship flight, which is expected to carry the first prototype of these orbital AI servers.
AI Writer
Bio: Joseph Michael is an MBA graduate in Marketing from Ladoke Akintola University of Technology and a passionate tech enthusiast. As a professional writer and author at AIbase.ng, he simplifies complex AI concepts, explores digital innovation, and creates practical guides for Nigerian learners and businesses. With a background in marketing and brand communication, Joseph brings clarity, insight, and real-world relevance to every article he writes.