In a move that reads like science fiction but lands firmly in corporate reality, SpaceX to acquire xAI marks Elon Musk’s latest step toward consolidating his vast constellation of companies.

SpaceX confirmed it is taking over xAI, the artificial intelligence startup behind the Grok chatbot, publishing a memo from Musk announcing the merger. Financial terms were not disclosed publicly. However, a source familiar with the transaction said the deal values xAI at $125 billion (£91 billion) and SpaceX at $1 trillion — positioning SpaceX as the most valuable private company in history.

An “Innovation Engine”

In his memo, Musk described the merger as the creation of an “innovation engine,” uniting artificial intelligence, rocket technology, space-based internet and media under a single corporate roof.

xAI began as a division of X, formerly Twitter, after Musk acquired the social media platform in 2022. Its access to real-time text and user data became a training ground for AI development. By spring 2025, xAI was spun off as an independent entity and was valued by investors higher than X itself.

Its flagship product, Grok, has faced scrutiny over its image-generation capabilities. In recent weeks, both the European Commission and the UK’s Ofcom launched investigations into X amid concerns Grok was used to generate sexualized images. In January, xAI announced new user restrictions limiting image-editing features.

Valuations and Long-Term Vision

Emma Wall, chief investment strategist at Hargreaves Lansdown, said Musk now leads in what she called “two incredibly frontier technologies”: AI and space exploration.

Because the merger remains entirely private, Wall noted, it has not been tested by public markets in the way Tesla has.

“What you’re seeing priced in at these valuations is a kind of multi-decade vision,” she told BBC Radio 4’s Today programme, referencing ambitions to move energy generation and data centers into space. However, she cautioned that any tangible benefits may not materialize for “10, 20, 30 years.”

Tesla’s Role and the “Super Company” Concept

The merger follows Tesla’s announcement last month of a $2 billion investment in xAI. Musk told Tesla investors he envisions xAI acting as an “orchestra conductor” for Tesla’s robot-powered factories.

He also revealed plans to halt production of two car models in favor of focusing on robotics — one of the most dramatic pivots in Tesla’s history.

“It’s those type of technologies that he’ll be looking to leverage with this new kind of super company,” Wall said.

Tesla proceeded with its xAI investment despite pushback from some shareholders. In a vote last year, abstentions and opposition outnumbered approvals.

IPO Speculation and Strategic Consolidation

SpaceX is reportedly exploring plans to go public. Emily Zheng, senior analyst at Pitchbook, said the acquisition bears the hallmarks of IPO preparation.

“The sheer cost of compute, infrastructure, and energy is why we are seeing many of venture’s most valuable startups like SpaceX prepare to go public this year,” Zheng said. “Consolidating these companies ahead of an IPO allows SpaceX to present a differentiated, capital-efficient growth narrative to public investors.”

An IPO — or Initial Public Offering — is when a private company first sells shares to the public on a stock exchange.

Scaling to the Stars

In the SpaceX memo, Musk framed space as the ultimate solution to AI’s enormous energy demands.

“In the long term, space-based AI is obviously the only way to scale,” he wrote, adding that launching AI satellites will be the immediate focus.

He went further still, arguing that space-based data centers could finance self-sustaining lunar bases, a civilization on Mars and eventually expansion beyond.

With xAI now under SpaceX, Musk’s portfolio tightens further. Neuralink and The Boring Company remain the only smaller ventures not absorbed into larger operations.

Notably, xAI acquired X in an all-stock transaction last March, with Musk saying the merger would “combine the data, models, compute, distribution and talent.”

As SpaceX to acquire xAI reshapes Musk’s corporate universe, the merger signals a bold bet that the future of intelligence — artificial and human — may ultimately be written among the stars.