In a surprising turn of events, SpaceX has officially acquired Elon Musk’s artificial intelligence (AI) company, xAI.
With this merger the combined company is now valued at $1.25 trillion, as per Bloomberg.
Why SpaceX acquired xAI?
On Monday, February 2, 2025, Musk wrote in a memo posted to the rocket company’s website that this merger majorly aims to create space-based data centers.
The tech billionaire stated, “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.”
Several other reports suggested SpaceX was preparing an IPO for as early as June of this year.
However, it remains unclear whether the tie-up will affect that timeline.
The merger has tied up two companies of Musk, both of them are currently undergoing some financial crises, as xAI is reportedly burning nearly $1 billion per month.
Meanwhile, SpaceX is currently generating as much as 80% of its revenue from launching its own Starlink satellites.
Notably, xAI bought X — Elon Musk’s micro blogging site — which is claimed to be valued at $113 billion.
SpaceX is currently aiming to colonise Mars till 2030, while xAI is competing with leading industry players such as OpenAI and Google.
Musk also leads Tesla, The Boring Company, and Neuralink. Previously, xAI secured a funding of $2 billion from SpaceX.
