SpaceX Acquires xAI in $1.25 Trillion Merger

Elon Musk has orchestrated a major consolidation between two of his most ambitious ventures. On February 2, SpaceX officially acquired xAI in an all-stock transaction that values the combined entity at $1.25 trillion, with SpaceX at $1 trillion and xAI at $250 billion.

The Deal Structure

The merger is structured as a share exchange, converting each xAI share into 0.1433 shares of SpaceX stock. xAI will continue operating under the SpaceX umbrella as the companies integrate strategy and resources.

The timing is no coincidence. Reports of a potential SpaceX IPO surfaced in late January, with the public offering reportedly being weighed for mid-2026. The company is expected to raise up to $50 billion at a valuation that could reach $1.5 trillion, which would rank among the largest equity offerings ever.

Orbital Data Centers

The strategic rationale goes beyond financial engineering. Musk has argued that “within two to three years, the lowest cost way to generate AI compute will be in space,” pointing to the long-term appeal of space-based power generation and thermal management for compute-heavy workloads.

The concept is aimed at the growing strain on terrestrial power and cooling infrastructure as AI models scale. A merger with xAI would also deepen ties between SpaceX’s global connectivity ambitions and xAI’s AI model development.

Turbulence Inside xAI

The merger has not been without friction. Multiple reports indicate a significant internal shake-up at xAI, including high-profile departures among early leaders. Musk has also acknowledged organizational changes designed to increase execution speed, as the company pushes to accelerate product development.