SpaceX Acquires xAI in Historic Deal, Creating $1.25 Trillion Tech Titan
In a move that reshapes the landscape of private technology conglomerates, SpaceX announced on Monday its acquisition of Elon Musk's artificial intelligence company, xAI. The deal, first reported by the New York Times, creates the world's most valuable private company, with a combined valuation estimated by Bloomberg at a staggering $1.25 trillion.
Musk framed the acquisition as the creation of "the most ambitious, vertically-integrated innovation engine on (and off) Earth," according to an internal memo obtained by the NYT. The combined entity will merge SpaceX's rockets, Starlink satellite internet, and direct-to-cell communications with xAI's AI capabilities and the X platform, which Musk described as the "world's foremost real-time information and free speech platform."
The announcement, laden with visionary and philosophical language, outlined plans to deploy orbital data centers. Musk argued that space is the "only way to scale" AI long-term, citing the abundance of solar energy beyond Earth's atmosphere. He elaborated on ambitions to help humanity ascend the Kardashev scale—a measure of a civilization's technological advancement—and to "extend the light of consciousness to the stars," even likening the future constellation of AI satellites to a "sentient sun."
The acquisition occurs against a backdrop of SpaceX's rapidly escalating valuation. From $400 billion last summer, it doubled to $800 billion by December. Recent reports suggest Musk was considering taking SpaceX public at a $1.5 trillion valuation, which would mark the largest IPO in history. A Bloomberg source familiar with the deal indicated the public offering is still expected later this year, though the impact of absorbing xAI on those plans remains unclear. xAI was last privately valued at approximately $230 billion.
This consolidation is the latest step in Musk's strategic pivot towards AI across his business empire. Last year, his social media platform X merged with xAI, becoming a primary outlet for its chatbot, Grok. The chatbot faced intense criticism last month after being used to generate tens of thousands of non-consensual AI-generated nude images, primarily of women and children—a controversy that has cast a long shadow over xAI's public perception. Concurrently, at Tesla, Musk has aggressively redirected focus toward autonomous, AI-powered machines like robotaxis and humanoid robots, even as it phases out some traditional vehicle lines.
Industry Reaction:
"This is a logical, if audacious, step," says Dr. Anya Sharma, a tech policy analyst at the Brookings Institution. "Musk is building a closed-loop ecosystem: data from X and Starlink users fuels AI development on space-based servers powered by solar energy. The regulatory and ethical frameworks for such a structure simply don't exist yet."
"It's a masterclass in distraction," offers a more critical Marcus Thorne, a venture capitalist and frequent commentator on tech ethics. "They buy a company whose flagship product facilitated mass-scale digital sexual abuse, wrap it in grandiose space poetry about 'consciousness,' and hope we forget. This isn't innovation; it's laundering a toxic asset into a 'moonshot' narrative to inflate valuation before an IPO."
"The engineering challenge is phenomenal," notes David Chen, a senior aerospace engineer at a rival firm. "Orbital data centers solving Earth's AI energy constraints? If anyone has the capital and vertical integration to attempt it, it's this new entity. The technical hurdles, however, are astronomical—literally."