Palantir co-founder Joe Lonsdale talks about a potential merger between Elon Musk’s company and Amazon’s OpenAI investment on “The Claman Countdown.”
Elon Musk’s SpaceX announced Monday that it will acquire artificial intelligence startup xAI. It’s a move that significantly expands the rocket and satellite company’s ambitions in data centers and advanced computing.
The deal will combine SpaceX’s launch and satellite operations with the fast-growing AI company, giving Musk tighter control over the infrastructure, power demands and computing power that increasingly defines the artificial intelligence race.
According to people familiar with the matter, the deal values SpaceX at about $1 trillion and xAI at about $250 billion, highlighting the size of the combined company.
SpaceX said in a statement that the acquisition was motivated by expectations that global demand for AI computing will soon outstrip the power and cooling capacity available on Earth.
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The xAI and Grok logos will be seen on February 16, 2025. (Dado Luvitch/Reuters)
Musk said the combined company plans to explore space-based data centers powered by near-constant solar energy as a way to overcome the limitations of ground power.
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The SpaceX logo will appear on your smartphone screen. (Thomas Fuller/SOPA Images/LightRocket, Getty Images)
“In the long term, space-based AI is clearly the only way to scale,” Musk said, outlining a vision that relies on space infrastructure to support future computing needs.
The acquisition sets a new record for the world’s largest merger and acquisition transaction. SpaceX is already the world’s most valuable private company, with recent insider stock sales last valuing it at about $800 billion.
The merger comes as SpaceX prepares for an initial public offering later this year that could value the company above $1.5 trillion, according to people familiar with the plans.
SpaceX Starship launches during its fifth flight test on October 13, 2024 in Boca Chica, Texas, USA. (Kayley Greenlee Beal/Reuters)
The deal could face scrutiny from regulators and investors over governance, valuations and conflicts of interest, given Musk’s overlapping leadership roles at multiple companies and the potential transfer of engineers, technology and contracts between companies.
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SpaceX has billions of dollars in federal contracts with NASA, the Department of Defense and the U.S. intelligence community, all of which may have the authority to review large acquisitions that involve national security or other risks.
