Elon Musk has cemented his vision of a unified technology empire following the announcement that SpaceX has completed its acquisition of xAI.
The transaction, which values the combined entity at approximately $1.25 trillion (£970bn), creates the world’s most valuable private firm.
By bringing together SpaceX’s sprawling launch infrastructure and the rapidly evolving artificial intelligence of xAI, including its flagship chatbot, Grok; Mr Musk noted he aims to create what he describes as a “mutually reinforcing ecosystem” spanning Earth and orbit.
At the heart of this historic merger is a strategic pivot toward “off-world” computing. In a memo published on the SpaceX website, Mr Musk argued that the explosive growth of AI is rapidly pushing terrestrial data centres to their physical limits.
He noted that modern systems require massive amounts of power and cooling that land-based facilities struggle to provide sustainably.
Consequently, the company is betting on space-based data centres, powered by solar energy and supported by the existing Starlink satellite network, to meet future demand without straining local communities or the environment.
The financial architecture of the deal sets a new global record for a corporate acquisition, surpassing the $203 billion takeover of Mannesmann by Vodafone in 2000.
Sources familiar with the transaction indicate that the deal values SpaceX at roughly $1 trillion and xAI at $250 billion.
Under the terms of the agreement, xAI investors will receive SpaceX shares, while some executives have the option of a cash payout.
This consolidation is widely seen as a precursor to a potential public offering, with analysts suggesting an IPO could value the combined company at more than $1.5 trillion.
Furthermore, the merger addresses the significant financial pressures facing both ventures. Currently, xAI is reported to be burning nearly $1 billion every month as it attempts to keep pace with industry rivals such as Google, Meta, and OpenAI.
By integrating with SpaceX, the AI startup gains access to a stable, capital-intensive infrastructure that could lower long-term operating costs.
Simultaneously, SpaceX secures a dedicated driver for its satellite business, ensuring a constant cycle of launches and upgrades to support its new orbital AI capabilities.
Despite the strategic logic, the deal is expected to face intense scrutiny from global regulators. Because Mr Musk holds leadership roles across several interconnected firms, questions have been raised regarding governance, valuation fairness, and potential conflicts of interest.
Moreover, given that SpaceX holds billions of dollars in contracts with NASA and the US Department of Defense, the transaction may be reviewed for national security implications.
This acquisition marks a significant new phase in the “Muskonomy,” as the billionaire further integrates his interests in space, AI, and digital communications into a single, dominant powerhouse.