Elon Musk merges SpaceX with xAI to more effectively build “orbital data centers,”.The consolidation unites Musk’s AI operations under the umbrella of his aerospace and satellite business, a move he says will support ambitious plans to build data centers in space.
The combined entity is valued at approximately $1.25 trillion, according to Bloomberg’s reporting, with SpaceX’s valuation boosted by its Starlink satellite internet revenue and xAI’s prominent AI ambitions. Analysts were first to report the completion of the deal, which brings together two of Musk’s ventures that had been operating independently but aligned by technological vision.
In a memo posted on SpaceX’s official website, Musk explained that the acquisition is driven by the need to rethink how artificial intelligence infrastructure is powered and scaled. “Current advances in AI are dependent on large terrestrial data centers, which require immense amounts of power and cooling. Global electricity demand for AI simply cannot be met with terrestrial solutions, even in the near term, without imposing hardship on communities and the environment,” he said.
Musk’s statement outlines a future in which vast networks of satellites could serve as orbital data centers, overcoming the energy and cooling limitations of ground-based facilities. He has argued that deploying compute infrastructure into space — powered by abundant solar energy — could become the most cost-effective way to deliver AI processing at scale within the next few years.
The merger also brings xAI’s assets — including its Grok AI chatbot and its recent acquisition of the social media platform X — into the SpaceX fold. SpaceX continues to pursue an initial public offering that could take place later this year, although it is not yet clear whether the integration of xAI will affect the timing or valuation of that planned IPO.
Under the combined structure, SpaceX will blend its core capabilities in rockets, satellites, and space infrastructure with xAI’s artificial intelligence development, aiming to create a vertically integrated global technology platform. Musk has described the union as intended to accelerate innovation both on Earth and beyond, encompassing AI, space-based internet, direct-to-mobile communications, and real-time information services.
While space data centers are the long-term strategic objective, reporting notes that the two entities may continue operating semi-independently in the near term due to regulatory and technical considerations. xAI is expected to maintain its branding and core mission, even as the combined company charts a new direction for AI and aerospace technology.
This move reflects Musk’s broader strategy of consolidating his various technology ventures, streamlining efforts across AI, space launch systems, satellite communications, and digital platforms. With the merger now formalised, SpaceX’s path toward orbital compute infrastructure and potential public market debut will be closely watched by investors and industry observers alike.
