Elon Musk Merges SpaceX and xAI to Build Space-Based Data Centers

WASHINGTON: (Web Desk) – Elon Musk’s SpaceX has officially acquired his artificial intelligence company xAI in a merger aimed at creating space-based data centers, according to a statement released Monday. The move combines SpaceX’s rocket technology with xAI’s AI expertise, forming what Musk described as “the most ambitious, vertically-integrated innovation engine on and off Earth.”

The merger comes as funding for AI projects across big tech begins to show signs of strain. Musk said the plan is to launch a constellation of satellites that will operate as orbital data centers, harnessing solar power in space to meet the increasing electricity demands of AI computing. He noted that powering AI at scale on Earth would place a heavy burden on communities and the environment.

“By directly harnessing near-constant solar power with minimal operating or maintenance costs, these satellites will transform our ability to scale compute,” Musk said in the announcement.

SpaceX plans to deploy one million satellites as data centers using its Starship rocket, which is expected to reach a launch rate of one flight per hour carrying 200 tons of payload. The statement did not reveal financial details of the acquisition or a timeline for initial satellite deployment.

According to Bloomberg, the combined company would be valued at $1.25 trillion. The deal further connects Musk’s sprawling business empire, which includes Tesla and X, formerly Twitter. xAI, which operates the Grok chatbot, was valued at $230 billion in a January funding round.

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The merger pools capital, computing resources, and talent as Musk pushes forward his vision of AI data centers in space. SpaceX is reportedly targeting an initial public offering by mid-June that could raise up to $50 billion.

SpaceX dominates the space launch market with its reusable rockets and operates the largest satellite constellation via Starlink. Musk had previously resisted taking SpaceX public, citing a desire to avoid the scrutiny of public markets and arguing that short-term financial expectations could conflict with his long-term goal of settling Mars.

However, SpaceX’s current priorities—including developing the Starship rocket for Moon and Mars missions—require massive investment, making the merger with xAI a strategic step in securing the capital and resources needed for these ambitious projects.