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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.