Imagine one company controlling the rockets that launch satellites, the networks that connect them, and the artificial intelligence that decides what they do. That future moved closer to reality earlier this week, when Elon Musk pulled off one of the largest corporate mergers in history – folding SpaceX into his AI startup, xAI.
Valued at around $1.25 trillion, the deal isn’t just a flex of wealth or ambition. It hints at how the technology shaping your internet, navigation, work, and even national security may soon come from a single, tightly linked ecosystem.
Inside the merge of SpaceX and xAI
Over the past year, SpaceX has begun to look like a machine built to win. Founded more than two decades ago, the rocket company is pulling in nearly $16 billion a year, largely powered by Starlink, its fast-growing satellite internet business. With more than 9,400 satellites already in orbit – and plans to someday scale that number into the hundreds of thousands – SpaceX hasn’t just been launching rockets.
It’s been quietly becoming global infrastructure.
xAI, by contrast, was built for speed, not stability. Launched in 2023, the company quickly recruited researchers from DeepMind and OpenAI, signaling Musk’s intent to compete at the highest level of artificial intelligence. But ambition came at a cost, and revenues have since sat in the low hundreds of millions, while expenses continue to balloon.
It has reportedly been burning roughly $1 billion a month on AI chips, data centers, and products like the Grok chatbot and Musk’s social platform, X.
It wasn’t long before the struggling imbalance started to become clear. Together, Musk realised they solve each other’s biggest weaknesses – and it was a realization that has set the stage for one of the most unusual corporate marriages in modern tech.
The power (and pressure) of one big bet
The possibility of a merger has been circulating for some time, especially after reports that revealed SpaceX invested about $2 billion in xAI last summer. Even so, the transaction moved faster than many observers expected.
According to reporting by Bloomberg, the deal values xAI at roughly $250 billion and the combined company at about $1.25 trillion.
The figures stretched traditional valuation benchmarks, prompting critics to point to Musk’s personal influence. Musk has described the merger instead as a strategic integration aimed at overcoming AI’s limits on energy and scale, linking AI development to SpaceX’s launch systems and Starlink’s global network.
What happens next will depend on several open questions around when SpaceX plans to move forward with its IPO and whether Musk’s longer-term ideas – like placing data centers in space – can move from concept to reality.
