American aerospace manufacturer SpaceX has acquired artificial intelligence firm xAI in a move the company claims will create an unprecedented vertical integration spanning AI, rocketry, satellite internet, mobile communications, and social media operations.
The merger represents a significant consolidation of interests for founder Elon Musk, though industry observers remain divided on the ambitious timeline proposed.
The acquisition centres on a controversial thesis: that terrestrial data centres cannot sustainably meet projected AI power demands without straining electrical grids and exacerbating environmental pressures.
SpaceX argues orbital data centres, powered by continuous solar energy, offer the only viable path forward for scaling artificial intelligence infrastructure.
The deal, which gives the combined company a valuation of $US1.25 trillion ($1.8 trillion), was earlier announced to employees in a memo.
The firm was expected to price the shares at $US526.59 each, according to people familiar with the matter who asked not to be identified as the information was not public.
The deal also brought together two of the largest closely held companies in the world. XAI raised funds at a $US230 billion valuation in January, while SpaceX was set to go ahead with a share sale in December at a valuation of about $US800 billion
SpaceX was preparing for a major initial public offering (IPO), with Elon Musk aiming to list Starlink’s parent company as early as June. The IPO was expected to raise up to $50 billion, making it the largest public offering in history.
However, the planned merger has complicated these IPO ambitions. In a statement released on Monday, Musk explained that the merger was part of his grand vision to create “a sentient sun to understand the universe and extend the light of consciousness to the stars!”
Meanwhile, companies like xAI, Sam Altman’s OpenAI, and Mark Zuckerberg’s Meta have been working relentlessly over the past two years to build the expensive data centers and chips required to train and operate their AI models.
SpaceX CEO Elon Musk on Monday said “orbital data centres” would be essential to the future of the technology.
“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. In the long term, space-based AI is obviously the only way to scale,”
“This cost-efficiency alone will enable innovative companies to forge ahead in training their AI models and processing data at unprecedented speeds and scales, accelerating breakthroughs in our understanding of physics and invention of technologies to benefit humanity.” said Musk.
Space-Based Computing: Ambition Meets Physics
The plan involves deploying up to one million satellites functioning as orbital data centres—a staggering expansion beyond SpaceX’s existing Starlink constellation.
Company documents suggest these satellites would operate with minimal maintenance whilst drawing on near-constant solar radiation unavailable to ground-based facilities.
Critics, however, question the economics and practicality of such a scheme. The company acknowledges that even in 2025—a record year for orbital launches—global payload delivery totalled merely 3,000 tonnes, predominantly SpaceX’s own Starlink satellites aboard Falcon rockets.
Starship: The Linchpin
Success hinges entirely on the Starship heavy-lift vehicle achieving unprecedented operational cadence. SpaceX projects launching 200 tonnes per flight at hourly intervals, delivering millions of tonnes annually—a capability that remains undemonstrated.
The company claims this would enable deployment of 100 gigawatts of AI computing capacity yearly, with projections reaching one terawatt annually from Earth-based launches alone.
SpaceX estimates orbital computing will become cost-competitive with terrestrial alternatives within two to three years, though independent verification of these figures was not available.
Lunar Manufacturing and Kardashev Dreams
The proposal extends beyond near-Earth orbit.
SpaceX envisions lunar factories leveraging in-situ resources to manufacture satellites deployed via electromagnetic mass drivers, potentially generating 500 to 1,000 terawatts of orbital computing capacity annually—edging humanity towards what futurists term a “Kardashev Type II civilisation”
The company maintains these developments would fund permanent lunar bases and Martian settlements, though no concrete timelines for such endeavours were provided.
SpaceX noted the satellite constellation would adhere to existing space sustainability protocols, including end-of-life disposal procedures currently employed for Starlink operations.
Musk Becomes First Person Ever Worth $800 Billion After SpaceX Acquired xAI
Elon Musk has become the first person ever worth $800 billion or more, after SpaceX acquired his AI and social media company, xAI. The deal, which values the combined companies at $1.25 trillion, boosted Musk’s fortune by $84 billion to $852 billion.
Musk’s 43% stake in the merged company is now worth $542 billion, making SpaceX his most valuable asset. He also holds a 12% stake in Tesla worth $178 billion, plus Tesla stock options that could net him up to $1 trillion if performance milestones are met.
This marks the second merger of Musk’s companies in under a year, following last March’s combination of xAI and social media company X (formerly Twitter). With SpaceX now holding both xAI and other assets, the company is preparing for a highly anticipated IPO later this year
Musk is now a record $578 billion richer than the world’s second wealthiest person, Google cofounder Larry Page, who is worth an estimated $281 billion. That means Musk is also roughly half a Larry Page away from becoming the world’s first trillionaire.
The acquisition announcement has sparked debate within aerospace and technology sectors regarding feasibility, regulatory implications, and the concentration of critical infrastructure under singular corporate control.
