Musk Eyes Unprecedented Merger: SpaceX and xAI in Advanced Talks to Combine Forces
In a potential corporate maneuver that would fuse the final frontier with the cutting edge of computing, Elon Musk is in advanced talks to merge his privately-held rocket company SpaceX with his artificial intelligence firm xAI, according to a Bloomberg report citing people familiar with the matter.
The discussions, which have been communicated to some investors from both entities, could lead to an announcement as early as this week, though sources cautioned the negotiations remain fluid and could still unravel.
A merger would have immediate ramifications for SpaceX's closely-watched path to the public markets. Just last week, the Financial Times reported Musk had floated plans for a mid-June IPO for the space company, timed to a rare planetary alignment and his 55th birthday. Combining with xAI would likely postpone any such listing.
The strategic logic appears rooted in Musk's ambitious vision for AI's future in space. He has previously outlined plans to launch AI data centers into orbit—a massively capital-intensive endeavor requiring SpaceX's launch capabilities and xAI's technical prowess. This vision gained concrete form last week when SpaceX petitioned the Federal Communications Commission for permission to launch up to one million satellites to support "the explosive growth of data demands driven by AI," touting the energy efficiency of space-based solar power over terrestrial data centers.
xAI, which operates the Grok chatbot and is under the umbrella of Musk's X Corp., was valued at $200 billion in a funding round last fall. SpaceX, a key NASA contractor and operator of the Starlink internet constellation, is reportedly seeking to raise funds at a staggering $1.5 trillion valuation. Musk serves as CEO of both companies, in addition to leading Tesla, Neuralink, and The Boring Company.
Industry Reaction:
"This isn't just a merger; it's the birth of a new category," said Dr. Anya Sharma, a tech futurist at the Stanford Center for Innovation. "Musk is physically integrating the infrastructure layer (space) with the intelligence layer (AI). If it works, it creates an insurmountable moat. The regulatory and execution challenges, however, are astronomical."
"It's a desperate consolidation to prop up valuations," countered Marcus Thorne, a veteran hedge fund manager. "xAI needs SpaceX's cash flow and hardware, and SpaceX needs a shiny AI narrative to justify its insane $1.5 trillion price tag. It's financial engineering dressed up as cosmic ambition. Shareholders in a future IPO should be very wary."
"The synergy is obvious for their long-term Mars project," noted Kevin Li, a systems engineer formerly with NASA's Jet Propulsion Laboratory. "Autonomous systems powered by advanced AI will be mandatory for building and maintaining a sustainable presence on another planet. This merger could accelerate that roadmap by a decade."