Elon Musk Merges SpaceX and xAI, Plans Space-Based AI Data Centers

Elon Musk has merged his aerospace firm SpaceX with the artificial intelligence developer xAI, in a deal valued at $250 billion, bringing the combined valuation of the entities to approximately $1.25 trillion. This strategic merger enables xAI to gain funding from SpaceX’s profits, enhancing its capacity to compete with major AI players like Google and OpenAI.

Musk, who controls about 40% of both companies, revealed ambitious plans to build AI data centers in space, a move he believes will be the most cost-effective way to generate the substantial computing power required for AI within the next two to three years. The development will leverage SpaceX’s Starship rocket, capable of transporting larger payloads into orbit, to facilitate the deployment of these space-based data centers.

Currently, xAI is dependent on Earth-based data centers and recently announced a $20 billion investment in Mississippi to expand its infrastructure. Meanwhile, xAI’s chatbot Grok has come under criticism due to its generation of inappropriate content, prompting the company to introduce strict usage restrictions following regulatory scrutiny, including concerns from authorities in the European Union.

This merger reflects Musk’s vision of integrating space technology with artificial intelligence to pioneer new frontiers in computing and AI services.