On Monday, the acquisition of xAI by SpaceX was announced, effectively merging two of Elon Musk’s most ambitious ventures into what is now the world’s most valuable private entity.
Musk stated in a release on the SpaceX website, “This signals not just the next chapter, but the next volume for both the SpaceX and xAI missions.”
This merger can be interpreted as a sign of xAI securing the necessary capital to contend in the rapidly evolving AI landscape, while also underscoring the technology’s crucial role in the future pursuit of space exploration.
As of a secondary share sale in December 2025, SpaceX commanded an $800 billion valuation, while xAI was valued at $230 billion following its latest funding round in January, according to PitchBook, the research firm tracking private company valuations.
This strategic move also illuminates the drive among tech giants, like Musk’s corporations, to secure greater computational capacity for advancing artificial intelligence.
Musk observed, “Current AI progress hinges upon massive, terrestrial data centers demanding tremendous energy and cooling expenditures.” He added, “Thus, the only sensible path forward is to relocate these resource-intensive operations to a location offering abundant power and acreage.”
AI Data Centers in Orbit
On Friday, SpaceX petitioned the Federal Communications Commission (FCC) for approval to deploy a constellation of 1 million satellites into orbit. The filing specified the objective as establishing solar-powered data centers to “meet the burgeoning data demands precipitated by AI.”
Musk projected that “the most economical means of generating AI computation” would likely be found in space within the next two to three years.
Musk is the latest technology figure to highlight the escalating need for computing power in the AI era. Last year, Nvidia CEO Jensen Huang told CNBC that next-generation AI models would require “100 times” the energy of previous iterations. Goldman Sachs forecasts that by 2030, AI will inflate data center energy demand by 165%.
Technology behemoths are funneling billions into AI-related infrastructure to keep pace with this demand. Microsoft disclosed spending $37.5 billion on capital expenditures like data centers in its last quarter of 2025, while Meta spent $22.14 billion.
Concurrently, some U.S. residents have reported substantial increases in their electricity bills. An analysis by Bloomberg News last year indicated that power costs in locales near data centers climbed by 267% compared to five years prior.
However, steep utility bills are not the sole concern associated with this technology.
Musk’s xAI also holds ownership of his social media platform, X, whose Grok chatbot recently faced backlash for generating explicit imagery, much of it depicting real women. The AI-driven chatbot also drew criticism last year for a series of violent and antisemitic posts, for which the company issued an apology and blamed a system update.
Despite these issues, investors remain eager to fund AI ventures. In January, xAI secured $20 billion from backers including Fidelity Management & Research Company and the Qatar Investment Authority.
Crossover Within Musk’s Enterprises
Even before the official acquisition, there were significant interconnections between xAI and SpaceX. Several personnel, such as Christopher Stanley, who has served as SpaceX’s Lead Safety Engineer since 2018 and X’s Senior Director of Safety Engineering since 2022, have been employed across both entities.
Nevertheless, some individuals formerly associated with xAI have voiced public apprehension regarding potential cultural clashes between the two organizations.
“xAI prides itself on a ‘move fast and break things,’ flat hierarchy, act first, question later philosophy. (It’s not perfectly realized, but it strives for it.) I have a strong hunch that many xAI personnel will experience a significant culture shock when moving to SpaceX,” wrote Benjamin De Kraeker, a former member of xAI’s human data team.
In December, Musk confirmed intentions for an Initial Public Offering (IPO) for SpaceX, which was established in 2002. This Wall Street debut, reportedly valuing the company around $1.5 trillion, could stand as one of history’s largest—and this anticipation predated the xAI merger.
Both SpaceX and xAI have demonstrated ease in raising capital from investors keen to participate in their growth trajectories. However, becoming publicly traded will enhance the companies’ capacity to secure further funding.
This offering could significantly augment Musk’s already staggering wealth; his net worth stands at $676 billion according to the real-time Bloomberg tracker, positioning him as the world’s richest person. A combined public entity comprising SpaceX and xAI holds the potential to substantially elevate this figure.
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