Elon Musk is reshaping his business empire once again. SpaceX has officially absorbed Musk’s artificial intelligence startup, xAI, creating a combined company valued at a staggering $1.25 trillion. The move signals Musk’s plan to tightly link space infrastructure with next-generation computing.
Elon Musk announces merger of SpaceX and xAI
SpaceX confirmed the deal through a statement published on its website and signed by Elon Musk, backing up earlier reports from Bloomberg. Sources familiar with the matter said the combined valuation lands around $1.25 trillion, with SpaceX making up about $1 trillion of that total and xAI valued at roughly $250 billion. Employees were briefed on the numbers in an internal memo sent out on Monday. The agreement is set up as an all-stock transaction.
Instead of fully merging their daily operations, xAI will function as a wholly owned subsidiary under SpaceX. That setup is mainly tied to regulatory restrictions around SpaceX’s defense-related work, which place limits on sharing sensitive information. Because of those rules, SpaceX has reportedly warned staff to be cautious when engaging with xAI employees who may not have the required clearances.
Musk explained the bigger idea driving the merger by framing space as the next frontier for massive AI computing. He said that within the next two to three years, running large-scale AI calculations in space could become the most affordable option. According to him, that cost advantage would give innovative companies a major edge. It will allow them to train AI models and handle data at speeds and scales never seen before. He added that this shift could fast-track breakthroughs in physics and lead to new “technologies designed to benefit humanity” (via SpaceX.com).
Even after the merger, the combined company is still on track to explore a public listing later this year. SpaceX had earlier looked into a potential share sale that could bring in as much as $50 billion. This move would put it on pace to become the biggest IPO in history.
From a financial standpoint, the deal also gives xAI some much-needed backing. The AI startup behind the Grok chatbot has been spending heavily, with reports suggesting it’s burning through roughly $1 billion every month to keep its operations running.
Originally reported by Rishabh Shandilya on Mandatory.
