Elon Musk is uniting his rocket and satellite company SpaceX with his artificial intelligence firm xAI in a corporate consolidation that could lay the groundwork for one of the largest initial public offerings in history. According to Bloomberg News, the agreement was made public in an internal memo on Monday, uniting Musk’s AI aspirations and space exploration infrastructure under one corporate roof.
The newly combined business is estimated to be valued at around $1.25 trillion, with a share price set around $527, according to Reuters citing Bloomberg’s reporting. The acquisition comes as SpaceX prepares for a mid-June IPO that could garner as much as $50 billion and value the firm at approximately $1.5 trillion, according to the Financial Times.
Musk Verifies The X Deal
Musk appeared to corroborate the claims on Monday, answering “Yes” on X to a post addressing the merger prospects. SpaceX and xAI have told some of their investors about the conversations, with an announcement potentially coming as early as this week, while insiders cautioned that talks might still drag on longer or collapse.
The transaction would be structured as a share swap, with xAI shares traded for SpaceX stock. Corporate papers in Nevada reveal that two new entities—K2 Merger Sub Inc. and K2 Merger Sub 2 LLC—were created on January 21, with SpaceX Chief Financial Officer Bret Johnsen named as a managing member. Some xAI executives may be offered the opportunity to take cash instead of SpaceX stock.
SpaceX was most recently valued at about $800 billion in a secondary share sale, while xAI achieved a $230 billion valuation in November following a $20 billion Series E fundraising round. Both SpaceX and Tesla have invested $2 billion each in xAI, underscoring Musk’s aim of cross-pollinating resources throughout his company empire.
Strategic Rationale: AI In Orbit
Musk’s plan to build AI data centers in space is in line with the consolidation. Speaking at the World Economic Forum in Davos last week, Musk declared that “the lowest cost area to put AI will be in space. And it will be true within two years, maybe three at the latest”.
The combination would join SpaceX’s Falcon rockets and Starlink satellite constellation—which delivers internet access to more than 9 million customers via over 9,000 satellites—with xAI’s Grok AI chatbot and the X social media platform. SpaceX recently asked Federal Communications Commission authority to deploy up to one million satellites to manage “explosive growth of data demands driven by AI,” according to company papers.
In a similar development, SpaceX revised Starlink’s privacy policy last week to allows customer data to be utilized for AI training unless users opt out, possibly allowing xAI access to massive new datasets. Georgetown University privacy law scholar Anupam Chander told Reuters, “It certainly raises my eyebrow and would make me concerned if I was a Starlink user”.
The proposed merger might also boost the company’s position for defense contracts, as the Pentagon launches its “AI acceleration strategy.” In order to supply Grok goods to military networks, xAI already has a contract worth up to $200 million.