Elon Musk’s SpaceX has acquired xAI, in a deal that encompasses the billionaire’s increasingly costly ambitions to dominate artificial intelligence (AI) and space exploration.
The transaction was announced in a statement on SpaceX’s website signed by Musk and confirming an earlier Bloomberg News report.
The statement said SpaceX acquired xAI to “form the most ambitious, vertically-integrated innovation engine on (and off) Earth, with AI, rockets, space-based internet, direct-to-mobile device communications and the world’s foremost real-time information and free speech platform”.
The deal, which gives the combined company a valuation of $1.25 trillion (€1.06 trillion), was announced to employees in a memo on Monday, Bloomberg News reported earlier. The firm is expected to price the shares at $526.59 each, according to people familiar with the matter, asking not to be identified as the information isn’t public.
Representatives for SpaceX and xAI didn’t immediately respond to requests for comment.
The deal brings together two of the largest closely-held companies in the world. XAI raised funds at a $230 billion valuation in January, while SpaceX was set to go ahead with a share sale in December at a valuation of about $800 billion.
Terms of the offering including price and valuation weren’t disclosed in the statement on SpaceX’s website.
The company is still expecting to hold an initial public offering later this year, one of the people said. SpaceX had been planning an IPO that could raise as much as $50 billion.
In explaining the rationale for the deal, Musk said in the statement that the least expensive way to do AI computations within two to three years will be in space.
“This cost-efficiency alone will enable innovative companies to forge ahead in training their AI models and processing data at unprecedented speeds and scales, accelerating breakthroughs in our understanding of physics and invention of technologies to benefit humanity,” he wrote.
SpaceX is requesting permission to launch as many as a million satellites into the Earth’s orbit for the plan, according to a filing last Friday.
The offering further entangles Musk’s various business ventures. The billionaire acquired social media platform Twitter in late 2022, renamed it X, then merged the site with his AI startup xAI in a $33 billion deal.
XAI, which also operates chatbot Grok, is an expensive operation, burning around $1 billion a month in service of its stated ambition to gain “a deeper understanding of our universe.” A merger with SpaceX pools capital, talent, access to computing power – and blurs corporate boundaries.
Unlike some of Musk’s other ventures, SpaceX stands out as arguably his most successful and consistent business. The company, the only American one that can routinely send astronauts to and from the International Space Station, is a key rocket-launch provider for both NASA and the US Department of Defence, which the White House has moved to rename the Department of War.
The increasing revenue it’s generating from the Starlink network of more than 9,000 satellites is even more significant, now outpacing launch sales and presenting a potential source of funding for xAI’s capital-intensive business. – Copyright 2026 Bloomberg