SpaceX Absorbs xAI in Record-Breaking Merger
Elon Musk has merged his artificial intelligence startup xAI into SpaceX, creating the largest corporate merger in history and valuing the combined entity at approximately $1.25 trillion.
The transaction values SpaceX at roughly $1 trillion and xAI at $250 billion, according to documents reviewed by CNBC. The deal was structured as a share exchange, folding xAI directly into SpaceX’s corporate structure.
Musk described the move as a step toward building a fully integrated innovation platform spanning AI, rockets, satellites, and digital infrastructure — both on Earth and in orbit.
Orbital Data Centers Are the Strategic Core
The primary rationale behind the merger is to accelerate the development of what Musk calls “orbital data centers.”
By combining xAI’s computing ambitions with SpaceX’s launch capabilities and satellite infrastructure, the company aims to move AI processing into space — an approach designed to bypass terrestrial power constraints, land scarcity, and regulatory bottlenecks.
This vision aligns closely with SpaceX’s existing Starlink satellite network and its growing role as a backbone provider for global connectivity and defense-related communications.
Capital and Scale for xAI
The merger also solves a major constraint for xAI: capital intensity.
The AI startup has been burning cash rapidly as it scales infrastructure to compete with rivals such as OpenAI and Anthropic. Folding xAI into SpaceX gives it access to a vastly larger balance sheet, long-term contracts, and capital markets leverage.
Prior to the merger, xAI was most recently valued at roughly $230 billion in a funding round completed last month.
IPO Timing Comes Into Focus
The deal comes just ahead of a widely anticipated SpaceX initial public offering.
Reports have indicated the company may seek to raise tens of billions of dollars at a valuation potentially exceeding $1.5 trillion. The xAI merger strengthens SpaceX’s equity story by layering high-growth AI exposure onto its already dominant aerospace and satellite business.
For public market investors, the combined entity represents a rare convergence of:
- AI infrastructure
- Satellite communications
- Defense and government contracts
- Launch and space logistics
Why This Matters
This merger isn’t about cost synergies or consolidation — it’s about control.
By integrating AI directly into the physical infrastructure of space, SpaceX is positioning itself as a foundational platform for the next phase of computing. If orbital data centers become viable, the company could redefine how and where AI models are trained and deployed.
WSA Take
This isn’t just the biggest merger ever — it’s one of the most strategically ambitious.
By fusing AI with launch dominance and satellite scale, SpaceX is attempting to own not just the tools of intelligence, but the physical layer they run on. Whether orbital data centers prove commercially viable or not, the move signals a clear shift: the future of AI infrastructure may extend far beyond Earth.
For investors, this deal reframes SpaceX from a rocket company into a next-generation infrastructure titan.
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