Elon Musk’s SpaceX Merges With xAI In Bid To Launch AI Data Centers In Space
In a bold move that consolidates Elon Musk’s sprawling tech empire, SpaceX has officially acquired xAI, the artificial intelligence company he founded. The merger, announced on February 2, 2026, via a statement on SpaceX’s website, creates what Musk describes as “the most ambitious, vertically-integrated innovation engine on (and off) Earth.” The combined entity is valued at approximately $1.25 trillion, with SpaceX valued at $1 trillion and xAI at $250 billion.
The acquisition unites SpaceX’s expertise in rockets, satellite networks like Starlink, and space exploration with xAI’s AI capabilities, including the Grok chatbot and advanced AI models. Musk emphasized that the primary driver behind the deal is to accelerate the development of space-based AI data centers, or orbital compute facilities.
Musk argued in the announcement memo that AI’s explosive growth is straining Earth’s resources: “Current advances in AI are dependent on large terrestrial data centers, which require immense amounts of power and cooling. Global electricity demand for AI simply cannot be met with terrestrial solutions, even in the near term, without imposing hardship on communities and the environment.”
He predicted that within 2 to 3 years, the lowest-cost way to generate AI compute power would be in space, leveraging abundant solar energy, natural vacuum cooling, and Starship’s massive launch capacity to deploy large-scale orbital infrastructure. This vision includes solar-powered satellites functioning as data centers, potentially bypassing Earth’s energy grids and environmental constraints.
The merger follows xAI’s earlier integration with the social media platform X (formerly Twitter), which Musk acquired and later folded into his AI efforts. Now, under SpaceX’s umbrella, the combined company brings together rockets, space-based internet, direct-to-mobile communications, real-time information platforms, and cutting-edge AI.
This consolidation comes as SpaceX prepares for a potential blockbuster IPO later in 2026, which could rank it among the most valuable companies ever to go public. Analysts see the deal as a strategic bailout for xAI’s high cash burn on AI infrastructure while giving SpaceX new avenues for revenue through AI-driven space applications.
Musk’s statement framed the merger in grand terms: “This marks not just the next chapter, but the next book in SpaceX and xAI’s mission: scaling to make a sentient sun to understand the Universe and extend the light of consciousness to the stars!”
While the immediate focus is on unifying resources and talent, the long-term ambition—orbital AI data centers—could redefine how humanity powers the next era of artificial intelligence, funding further expansion to the Moon, Mars, and beyond.
