Elon Musk merges SpaceX and xAI in $1.25 trillion deal to build space-based data centers
Musk announced the merger to combine SpaceX's launch capabilities with xAI's artificial intelligence technology, citing the need for space-based infrastructure to support AI growth.
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Elon Musk announced Monday the merger of SpaceX and xAI, valuing the combined entity at $1.25 trillion. According to the announcement, SpaceX is valued at $1 trillion and xAI at $250 billion. The deal significantly increases the valuation of Musk's business empire, which now approaches $3 trillion across his various holdings.
Musk stated that the merger was necessary because artificial intelligence requires expansion into space. He cited the environmental and community costs associated with large terrestrial data centers that consume immense amounts of power and cooling. "In the long term, space-based AI is obviously the only way to scale," Musk said in the announcement.
The combined entity was described by Musk as "the most ambitious vertically integrated engine of innovation within (and outside) the Earth," according to statements from the companies. The merger integrates SpaceX's rocket launch capabilities with xAI's artificial intelligence technology, which includes the Grok chatbot.
The valuations announced in the merger exceed previous assessments of both companies. In a funding round completed in early January, xAI was valued at $230 billion. In late 2025, SpaceX was valued at $800 billion in a stock sale transaction.
The merger further consolidates Musk's business holdings, which already include Tesla and the social media platform X. Musk acquired Twitter in late 2022 and subsequently merged it with xAI.
Space-based data centers have become a focus for major technology companies. Google is developing Project Suncatcher to build solar-powered AI data centers in space. China and Europe are also exploring space-based data center infrastructure, according to reports.
Following the merger announcement, Chinese solar panel manufacturers experienced significant stock gains. Shares of JinkoSolar, one of the world's largest panel producers, jumped as much as 20% in early trading Wednesday after local media reported that staff linked to Musk had recently visited several photovoltaic suppliers in China. Jolywood Suzhou Sunwatt, which manufactures photovoltaic auxiliary materials, also saw shares rise 20%. The stock movements followed reports of a potential business partnership and came days after Musk said he planned to build large-scale solar cell production capacity in the United States.
One of Musk's next steps involves taking the merged company public, according to reports.