The merger between Elon Musk’s SpaceX and xAI has been agreed upon, the former announced on Monday. SpaceX will acquire xAI to form the most ambitious vertically integrated innovation engine on Earth (and beyond), featuring AI, rockets, space-based internet, direct communications to mobile devices, and the world’s leading real-time information and free speech platform.
“This is not just the next chapter, but the next book in SpaceX and xAI’s mission: to create a sentient sun to understand the universe and spread the light of consciousness to the stars,” Musk said in a statement. The deal had reportedly been in discussion for several days, but both parties and Mr. Musk announced the deal had been finalized. The merger values the newly combined company at $1.25 trillion. Employees of both companies were notified of the completion of the merger on Monday.
Additionally, Musk said in a statement that he sees the merger as an effective and inexpensive way to generate AI computing. “My estimate is that within two to three years, the lowest-cost way to generate AI computing will be in space. This cost efficiency alone will allow innovative companies to advance the training of AI models and data processing at unprecedented speed and scale, accelerating breakthroughs in our understanding of physics and the invention of technologies that benefit humanity.” He added that because AI remains so important, its development will need to happen with a big pitch like space. Current advances in AI rely on large terrestrial data centers that require vast amounts of power and cooling. The global power demand for AI cannot be met with ground-based solutions without imposing hardship on local communities and the environment, even in the short term. In the long term, it is clear that space-based AI is the only way to scale. ”
Additionally, this merger occurred just before SpaceX’s IPO, adding another layer for early investors to consider. There is no expected date yet for the new mega-IPO, but it could likely be worth hundreds of dollars per share. The deal is the biggest partnership in Musk’s vast business portfolio, combining two companies whose values have soared in the private markets. SpaceX launched a secondary stock sale last year at a valuation of $800 billion, while xAI was valued at about $230 billion in a $20 billion round that closed earlier this year.
Before the merger was announced, SpaceX said it was planning an initial public offering that could raise up to $50 billion and value the company at about $1.5 trillion. It’s unclear how the merger will affect those numbers, but the combined valuation of both companies is just $250 billion short of their previously offered value.
