SpaceX Acquires xAI, Bringing Musk's AI and Space Businesses Together The move links advanced AI development with SpaceX's launch systems and its expanding satellite infrastructure, marking a significant shift in how Musk intends to scale future computing capabilities.
You're reading Entrepreneur India, an international franchise of Entrepreneur Media.
Elon Musk-led SpaceX has announced the acquisition of xAI, placing the billionaire's AI venture under the same corporate structure as his rocket and satellite business.
The move links advanced AI development with SpaceX's launch systems and its expanding satellite infrastructure, marking a significant shift in how Musk intends to scale future computing capabilities.
In a post outlining the reasoning behind the deal, Musk described the merger as a way to build "the most ambitious, vertically-integrated innovation engine on (and off) Earth." He said that combining AI, rockets, space-based internet and direct-to-device communications would allow faster experimentation and tighter control over critical technologies.
He said that traditional, Earth-based data centres may not be able to sustainably meet the power demands of next-generation AI systems. According to Musk, orbit offers an alternative, with near-continuous access to solar energy. He wrote that "within 2 to 3 years, the lowest cost way to generate AI compute will be in space," a claim that has drawn both interest and scepticism from experts.
Discussion of orbital data centres has already been circulating in technical and policy circles, and the SpaceX-xAI combination brings those ideas closer to implementation. Reuters has reported that SpaceX is preparing for an initial public offering later this year, and analysts say folding xAI into the company could help justify investment in very large and capital-intensive space projects.
Some reports estimate a combined valuation approaching USD 1 trillion, although figures and transaction details vary. Neither SpaceX nor xAI has publicly confirmed specific financial terms of the acquisition.
The technical challenges remain substantial. Building data centres in orbit would require hardware capable of surviving radiation and extreme temperatures, while also addressing latency for users on Earth. Regulators are also likely to examine issues related to radio spectrum use, orbital debris and national security.
SpaceX filings proposing a constellation of up to one million satellites designed to act as high-bandwidth, optically linked compute nodes have already attracted scrutiny from engineers and policymakers. The integration of xAI products, including the Grok chatbot, with Starlink and other Musk-linked platforms concentrates communications, real-time information and AI capabilities within a single corporate structure.
That concentration could invite closer regulatory attention, particularly if SpaceX proceeds with a public listing. The acquisition also reinforces Musk's long-standing view that the next phase of AI development will be closely tied to space-based infrastructure.
The deal follows funding activity. Late last month, Tesla agreed to invest about USD 2 billion to acquire shares in the AI company as part of a funding round disclosed earlier this year. xAI raised USD 20 billion in January, exceeding its initial target and attracting sovereign, institutional and strategic investors.
