SpaceX has acquired Elon Musk’s artificial intelligence startup xAI, creating the world’s most valuable private company, the spaceflight company announced Monday.
Musk, who is also the CEO of SpaceX, wrote in a note posted on the rocket company’s website that the merger is largely about creating space data centers — an idea he has become obsessed with in recent months.
“Current advances in AI depend on large land-based data centers, which require immense amounts of power and cooling. The global electricity demand for AI simply cannot be met with land-based solutions, even in the near term, without imposing hardship on communities and the environment,” he wrote. (xAI has been accused of impose some of these difficulties on communities near its data centers in Memphis, Tennessee.)
The tie-up values the combined company at $1.25 trillion, according to Bloomberg News, which was first to report the completed transaction. SpaceX has been would have prepare for an IPO as early as June this year. It is unclear whether the merger will affect this timeline. Musk did not address the IPO in his public memo.
The merger brings together two of Musk’s companies, each facing its own financial challenges. xAI is currently burning through around $1 billion per month, according to Bloomberg. SpaceX, meanwhile, generates up to 80% of its revenue from launching its own Starlink satellites, according to Reuters. Last year, xAI acquiredthe social media company also owned by Musk, Musk claims a combined company valuation of $113 billion.
Musk wrote in his memo that it will take a steady stream of many satellites – although he did not specify how many – to create these space data centers, ensuring that SpaceX will have an even greater steady stream of revenue for the foreseeable future. (This revenue loop probably looks even more attractive when you consider that satellites must be decommissioned every five years by the Federal Communications Commission.)
Although space data centers may be the stated goal, SpaceX and xAI have very different short-term goals.
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SpaceX is currently trying to prove that its Starship rocket is capable of taking astronauts to the Moon and Mars, while xAI competes with leading artificial intelligence companies like Google and OpenAI. The pressure on xAI is so great that the The Washington Post reported Mondaythat Musk eased restrictions on the company’s Grok chatbot, which helped turn it into a tool for creating AI-generated non-consensual sexual images of adults and children.
Musk is also the head from Tesla, The Boring Company and Neuralink. Tesla and SpaceX already invested $2 billion each in xAI.
