SpaceX to Acquire xAI in Share Swap Deal, Valuing Musk's AI Venture at Billions
LOS ANGELES, Feb 2 (Reuters) — In a move that consolidates two pillars of Elon Musk's technological ambitions, SpaceX has agreed to acquire the billionaire's artificial intelligence company xAI through a share swap, a person with direct knowledge of the deal told Reuters on Monday.
The source, speaking on condition of anonymity, said the exchange ratio has been set at 0.1433 shares of SpaceX for each share of xAI. Based on SpaceX's latest private market valuation, this would value xAI in the tens of billions of dollars, though the exact figure depends on the aerospace company's evolving worth.
Senior xAI executives will have an alternative option: they may choose to receive cash at $75.46 per xAI share instead of taking SpaceX equity, the source added. This cash-out provision is seen as a liquidity event for early backers and key personnel.
The acquisition, which has not been formally announced, represents a strategic intertwining of Musk's ventures in space and artificial intelligence. Industry analysts suggest the deal could funnel xAI's advanced AI research—including its Grok chatbot—toward enhancing SpaceX's satellite communications, autonomous rocket systems, and long-term ambitions for interplanetary technology.
"This isn't just a financial transaction; it's a blueprint for vertical integration," said Dr. Anya Sharma, a tech industry analyst at Stanford's Center for Corporate Strategy. "Musk is effectively creating a closed-loop ecosystem where AI developed at xAI can be immediately applied to SpaceX's engineering challenges, from Starlink network optimization to Starship's autonomous operations. It mirrors the playbook he used with Tesla and its AI team."
The deal arrives as competition in the AI sector reaches a fever pitch, with giants like Microsoft, Google, and OpenAI investing heavily. By folding xAI into SpaceX, Musk may be seeking to leverage the rocket company's substantial capital and hardware expertise to accelerate AI development outside the scrutiny of a standalone startup.
SpaceX did not immediately respond to requests for comment. The transaction is expected to close in the coming quarter, subject to regulatory and shareholder approvals.
(Reporting by Echo Wang; Editing by Paritosh Bansal)
Reactions from the Industry
Marcus Thorne, Venture Partner at Horizon Capital: "This is a masterstroke in corporate structuring. It allows xAI to tap into SpaceX's deep capital reserves and real-world data pipelines without the quarterly pressures of a public AI company. The share ratio seems designed to reward long-term belief in the combined vision."
Dr. Liana Chen, AI Ethics Researcher at MIT: "While the technological synergies are clear, this consolidation raises significant questions about the concentration of influence. We now have one entity controlling advanced AI, global satellite networks, and space access. The governance and ethical oversight of such a conglomerate need urgent scrutiny."
R.J. Bauer, former SpaceX engineer and now tech blogger: "This feels like a bailout dressed as a strategy. xAI was burning cash, and this is Musk moving chips around the table to keep it afloat. The 'cash option' for execs tells you everything—they're taking the money and running. It dilutes SpaceX shareholders to prop up his other pet project."
Sarah Phelps, Portfolio Manager at ClearSky Investments: "For investors, the key is the implied valuation. At a $75.46 cash-out price, the math suggests a hefty premium for xAI. It signals immense confidence in the AI asset's future worth, but also sets a very high bar for the integrated company to deliver tangible returns."