Musk merges SpaceX and xAI in $1.25 trillion mega deal

Key topics:SpaceX acquires xAI in all-stock deal valuing combined group at $1.25tnMusk pitches space-based AI computing, massive satellite expansionDeal fuels IPO plans and bankrolls xAI’s $1bn-a-month burn.Sign up for your early morning brew of the BizNews Insider to keep you up to speed with the content that matters. The newsletter will land in your inbox at 5:30am weekdays. Register here.Support South Africa’s bastion of independent journalism, offering balanced insights on investments, business, and the political economy, by joining BizNews Premium. Register here.If you prefer WhatsApp for updates, sign up to the BizNews channel here..By Loren Grush, Ed Ludlow and Liana Baker.Elon Musk is combining SpaceX and xAI in a deal that values the enlarged entity at $1.25 trillion, as the world’s richest man looks to fuel his increasingly costly ambitions in artificial intelligence and space exploration.The acquisition of xAI was announced in a statement on SpaceX’s website signed by Musk and confirming a Bloomberg News report earlier Monday. The deal gives SpaceX a valuation of $1 trillion, and xAI a value of $250 billion, people familiar with the matter said. The combined company’s valuation was announced to employees in a memo on Monday, some of the people said earlier. SpaceX said it acquired xAI to “form the most ambitious, vertically-integrated innovation engine on (and off) Earth, with AI, rockets, space-based internet, direct-to-mobile device communications and the world’s foremost real-time information and free speech platform.”.Read more:.Musk’s xAI burns $1bn a month as funding race heats up and revenue struggles.The company is still expecting to hold an initial public offering later this year, one of the people said. SpaceX had been planning an IPO that could raise as much as $50 billion, in what would be the biggest initial share sale to date.The combined firm’s shares are expected to be worth $526.59 each, according to some of the people, who asked not to be identified as the information isn’t public. The deal is all stock, one of the people said. Representatives for SpaceX and xAI didn’t immediately respond to requests for comment.The deal brings together two of the largest closely held companies in the world. XAI raised funds at a $230 billion valuation in January, while SpaceX was set to go ahead with a share sale in December at a valuation of about $800 billion.Terms of the offering including price and valuation weren’t disclosed in the statement on SpaceX’s website. In explaining the rationale for the deal, Musk said in the statement that the least expensive way to do AI computations within two to three years will be in space.“This cost-efficiency alone will enable innovative companies to forge ahead in training their AI models and processing data at unprecedented speeds and scales, accelerating breakthroughs in our understanding of physics and invention of technologies to benefit humanity,” he wrote.SpaceX is requesting permission to launch as many as a million satellites into the Earth’s orbit for the plan, according to a filing Friday.The offering further entangles Musk’s various business ventures. The billionaire acquired social media platform Twitter in late 2022, renamed it X, then merged the site with his artificial intelligence startup xAI in a $33 billion deal. XAI, which also operates chatbot Grok, is an expensive operation, burning around $1 billion a month in service of its stated ambition to gain “a deeper understanding of our universe.” A merger with SpaceX pools capital, talent, access to computing power — and blurs corporate boundaries.Unlike some of Musk’s other ventures, SpaceX stands out as arguably his most successful and consistent business. The company, the only American one that can routinely send astronauts to and from the International Space Station, is a key rocket launch provider for both NASA and the US Department of Defense, which the White House has moved to rename the Department of War. The increasing revenue it’s generating from the Starlink network of more than 9,000 satellites is even more significant, now outpacing launch sales and presenting a potential source of funding for xAI’s capital-intensive business. .Read more:.Musk’s xAI flags sabotage after controversial ‘White Genocide’ glitches.Following the announcement of the acquisition, SpaceX also noted that one of its Falcon 9 rockets suffered an undisclosed issue after launching a batch of Starlink satellites into orbit. The company said that while the upper port of the rocket safely deployed all the satellites on board, a mishap occurred just before the vehicle was set to take itself out of orbit..The incident marks a relatively rare misstep for the Falcon 9, which last suffered in an-flight issue in 2024. “Teams are reviewing data to determine root cause and corrective actions before returning to flight,” SpaceX said in a statement on X. .© 2026 Bloomberg L.P.

Musk merges SpaceX and xAI in $1.25 trillion mega deal

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