Elon Musk announced on Monday that SpaceX had acquired his artificial-intelligence startup xAI in a record-setting deal. The transaction valued SpaceX at $1 trillion, with xAI estimated at $250 billion, according to a source familiar with the matter. Investors in xAI will receive 0.1433 shares of SpaceX for every share they own, or alternatively, can opt for $75.46 per share in cash as part of the acquisition.
Musk highlighted that this deal unites his AI and space ambitions by integrating SpaceX’s rocket-and-satellite company with xAI’s Grok chatbot. The transaction could bolster SpaceX’s data-center ambitions, positioning it to compete against companies like Google, Meta, Anthropic, and OpenAI in the AI sector.
The combined company is anticipated to price its shares at about $527 each, another source said. This acquisition marks one of the most ambitious tie-ups in technology history, unifying a space-and-defence contractor with a fast-growing AI developer whose costs are driven by chips, data centers, and energy.
SpaceX already holds the title for the world’s most valuable privately held company at $800 billion, according to insider share sales. xAI was last valued at $230 billion in November, per the Wall Street Journal.
The merger comes as SpaceX plans a significant public offering this year that could value it above $1.5 trillion, two sources informed. The deal further consolidates Musk’s sprawling business empire into a tighter ecosystem, which some refer to informally as the “Muskonomy,” already including Tesla, Neuralink, and the Boring Company.
“Starlink was already generating cash flow, and now it adds an AI revenue layer while becoming a distribution surface for services,” noted Ali Javaheri, PitchBook’s Senior Emerging Spaces Analyst. “With potential policies allowing certain customer data use for model training and the prospect of orbital data centers, SpaceX is positioning itself as an integrated infrastructure platform capable of serving both commercial and government use cases—this narrative is poised to gain momentum heading into a public offering.”
Musk’s history of merging ventures suggests this move will face scrutiny from regulators and investors concerning governance, valuation, and potential conflicts. Given Musk’s overlapping roles across multiple firms, including his leadership in SpaceX, xAI, Tesla, Neuralink, and the Boring Company, there could be concerns about engineer movement, proprietary technology transfer, or contract shifts between entities.
SpaceX holds significant federal contracts with NASA, the Department of Defense, and intelligence agencies. Regulatory review of such mergers is routine to ensure national security and other risks are mitigated.