SpaceX acquires xAI as Elon Musk moves to integrate rockets, satellites and artificial intelligence

SpaceX has acquired xAI, Elon Musk’s fast-growing artificial intelligence business, in a move designed to bring the billionaire entrepreneur’s AI, space and communications ambitions under one corporate structure.

The deal brings together the world’s most valuable private equity firm and the developer of the Grok chatbot, marking one of the most surprising corporate combinations to emerge from Silicon Valley in recent years. It also comes ahead of the blockbuster market list that is widely reported later this year.

In a memo to employees, also published by X, Musk said the acquisition would create “the most ambitious, vertically integrated innovation engine on Earth (and abroad)”.

“By combining AI, rockets, space-based internet, direct and mobile communication and the world’s leading real-time information platform, we can accelerate innovation in all domains,” he wrote.

The deal deepens Musk’s strategy to integrate advanced AI with his space and satellite-internet empire, allowing SpaceX to tap into xAI’s computing power, data infrastructure and engineering talent. Industry observers say the merger could support long-term ambitions such as AI-driven satellite networks and space-based data centers.

Last year, Musk used xAI to acquire X, formerly Twitter, folding the social network into his broader AI strategy. The New York Times reported that xAI-X’s combined business was worth $113bn at the time.

The latest move brings SpaceX, xAI, iX and the Grok chatbot closer together ahead of a modified public offering that would put much of Musk’s private empire under one listed umbrella. According to Bloomberg, the combined group could be worth about $1.25 billion, with shares potentially worth about $527 each.

SpaceX, which designs and launches reusable rockets and operates the Starlink satellite broadband network, is estimated to have made around $15.5bn in revenue last year. Separately, the company is reportedly looking at raising capital of up to $50bn at a cost of around $1.5 trillion – a figure that could surpass Saudi Aramco’s record-breaking 2019.

Several global investment banks, including Bank of America, Goldman Sachs, JPMorgan Chase and Morgan Stanley, are said to be lining up lead roles in the IPO, underscoring investor interest in Musk’s unifying vision of AI, space and connectivity.

Although the size and ambition of the deal is unprecedented, analysts note that the combination brings together two capital-intensive businesses, both of which rely heavily on advanced chips, data centers and power. The combined group’s success in balancing those costs – and convincing public market investors of its long-term profitability – will be closely watched in the coming months.