SpaceX Acquires xAI in Record-Breaking $1.25 Trillion Deal, Paving Way for Historic IPO

Elon Musk's aerospace giant SpaceX has officially completed the acquisition of his artificial intelligence startup xAI, combining the two companies into a single entity valued at $1.25 trillion and creating the world's most valuable private company. The deal, announced Monday on SpaceX's website, values SpaceX at $1 trillion and xAI at $250 billion, with shares priced at approximately $526.59 each.

Musk outlined an ambitious rationale for the merger, centered on building orbital data centers to power artificial intelligence computing. "My estimate is that within 2 to 3 years, the lowest cost way to generate AI compute will be in space," Musk wrote in his announcement. By harnessing near-constant solar power with minimal operating and maintenance costs, these space-based satellites would transform the ability to scale computing infrastructure.​

The combined entity now integrates SpaceX's rocket launch services, the Starlink global satellite network, the X social media platform, and xAI's Grok chatbot into what Musk describes as a vertically integrated innovation engine. This consolidation addresses pressing challenges: xAI currently burns approximately $1 billion monthly, while SpaceX derives roughly 80% of its revenue from launching its own Starlink satellites.

The merger sets the stage for what could become the largest initial public offering in history, with sources indicating SpaceX has been negotiating IPO terms that would value the company at $800 billion before the xAI acquisition. The deal's extraordinary valuation and rapid completion have astonished industry observers, reflecting both massive expectations surrounding AI technology and concerns about a potentially overheated market.​

The announcement comes at a time when the industry is grappling with questions about AI valuations and sustainability. The speed at which Musk structured and executed the deal demonstrates his ability to reshape his business empire to pursue what he views as strategic imperatives in both artificial intelligence and space exploration.

The acquisition gives xAI immediate access to Starlink's infrastructure, SpaceX's engineering talent, and substantial capital resources necessary to pursue Musk's vision of orbital AI data centers. The combined company represents a fusion of rockets, satellites, social media, and generative AI capabilities under unified leadership. This vertical stacking positions the merged entity to compete in both the AI race and deep-space exploration simultaneously.​