As SpaceX gets ready to go public later this year, Elon Musk's aerospace company has bought his artificial intelligence startup, xAI, in a $1.25 trillion (£910 billion) transaction that unifies a portion of Musk's empire.

Specifically, the two companies announced a merger to create “the most ambitious, vertically integrated innovation engine on (and off) Earth.”

The collaborative endeavour will include AI, rockets, space-based internet, direct-to-mobile connectivity, and a significant platform for free speech and real-time information.

Musk's Vision of AI & Space Infrastructure

SpaceX will acquire xAI assets, including the Grok chatbot and the social media platform X. This acquisition aligns with Musk's plans to develop datacenters and solar-powered satellites in space to support artificial intelligence, a costly initiative.

The deal values SpaceX at $1 trillion and xAI at $250 billion, positioning the combined entity for a stock market float expected to exceed $1 trillion. Likewise, the float is anticipated for early summer to align with a planetary event and Musk’s birthday.

Remarkably, Musk will celebrate his 55th birthday on 28 June, coinciding with the close appearance of Jupiter and Venus. The recent deal announcement highlighted Musk's intention to establish space-based datacentres as a key reason for the agreement.

According to the announcement, current progress in AI relies heavily on terrestrial datacentres that consume significant power and cooling. It highlights that global electricity needs for AI cannot be satisfied with terrestrial methods in the near future without causing difficulties for communities and the environment.

“In the long term, space-based AI is obviously the only way to scale.”

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Strategic Acquisition & Bold Investment

Musk has been merging aspects of his businesses recently, highlighted by xAI's acquisition of the platform X in early 2025 and Tesla's announcement of a $2 billion investment in xAI last month.

Both SpaceX and xAI experienced significant valuations recently, with SpaceX projecting an expected value of $800 billion as it leads in satellite launches and secures substantial US federal government contracts.

Despite controversy surrounding xAI's Grok AI tool for promoting racist ideology and distributing nonconsensual sexualised deepfake images, the company has increased its valuation, recently announcing a $20bn Series E fundraise that values it at $230bn.

Furthermore, speculation and leaks regarding the deal have increased recently, with Musk providing a vague confirmation by replying “yes” to a post on X referencing the merger reports.

The news offers a positive distraction for Musk following Tesla's earnings report, which indicated decreasing revenues and issues in the car sector.

Shortly thereafter, the Department of Justice released 3 million files regarding Jeffrey Epstein, revealing Musk's friendly email exchanges with Epstein and plans to visit his private island. Musk has not commented on the latest revelations.

He referred to the emails' release as a “distraction” on X and stated that he was “well aware that some email correspondence with him could be misinterpreted and used by detractors to smear my name.”

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