Elon Musk’s aerospace giant SpaceX is set to acquire his artificial intelligence venture, xAI, in a monumental deal that values the combined entity at an astounding $1.25 trillion. This landmark transaction, confirmed by CNBC, marks the largest merger in history, with SpaceX holding a $1 trillion valuation and xAI pegged at $250 billion.
The strategic consolidation, announced by Musk via a blog post, aims to forge what he describes as “the most ambitious, vertically-integrated innovation engine on (and off) Earth.” This engine will encompass AI development, rocket technology, space-based internet infrastructure, and the X social media platform. A key driver for this merger, Musk articulated, is the ambitious vision of constructing “orbital data centers.”
This significant move precedes SpaceX’s highly anticipated initial public offering (IPO) later this year. Reports suggest the company is targeting a raise of up to $50 billion, with a potential valuation reaching as high as $1.5 trillion, positioning it as a titan in both the aerospace and technology sectors.
The merger is structured as a share exchange, where each share of xAI will be converted into 0.1433 shares of SpaceX stock. Financial documents reveal a per-share value of $75.46 for xAI and $526.59 for SpaceX. Independent banking valuations reviewed by CNBC place SpaceX’s worth between $859 billion and $1.26 trillion, while xAI is estimated to be valued between $219 billion and $294 billion.
Beyond the ambitious long-term vision, a critical rationale for the merger is the infusion of capital into xAI, the developer of the Grok chatbot. The AI startup is reportedly experiencing substantial cash burn as it races to build out its infrastructure and compete with established AI leaders such as OpenAI, recently valued at $500 billion, and Anthropic, which secured a term sheet valuing it at $350 billion. xAI itself was valued at approximately $230 billion following a $20 billion funding round concluded last month.
Musk, a co-founder of OpenAI who departed in 2018, launched xAI in 2023. The Grok AI tool has recently faced scrutiny over its capabilities, including the alleged generation of inappropriate imagery.
SpaceX, renowned for its reusable rockets and Starlink satellite internet service, is strategically positioned to capitalize on the growing demand for space-based data centers to support the burgeoning AI industry. The company’s existing contracts with NASA, including support for Artemis moon missions, and the Department of Defense, underscore its pivotal role in the U.S. space sector.
The prospect of a SpaceX IPO in 2026 first surfaced in December, a report Musk subsequently confirmed as accurate. Speculation suggests Musk is targeting mid-June for the debut, potentially coinciding with his birthday and a specific planetary alignment.
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