Mumbai, February 4: SpaceX has officially acquired xAI, the artificial intelligence startup founded by Elon Musk, in a landmark merger that values the combined entity at approximately USD 1.25 trillion. The deal, announced on Monday, February 2, 2026, integrates Musk’s aerospace infrastructure with advanced AI capabilities to create what the company describes as a vertically integrated "innovation engine" spanning Earth and orbit.

The consolidation brings SpaceX's rocket technology and Starlink satellite internet under the same corporate umbrella as xAI’s "Grok" chatbot and the social media platform X. This strategic move is designed to address the growing power and cooling constraints of terrestrial data centres by shifting  large-scale AI computation into space. Elon Musk Net Worth 2026: Tesla CEO Becomes 1st Person in History To Hit USD 800 Billion Milestone After SpaceX Acquires xAI.

Orbital Data Centre Strategy

Central to the merger is the vision of "orbital data centres," which would utilise SpaceX’s Starship launch system to deploy a vast network of satellites equipped with high-performance AI hardware. By moving compute off-planet, the company intends to harness unfiltered solar energy and radiative cooling, bypassing the environmental and electrical limitations currently facing massive data centres on Earth.

Musk has projected that space-based AI will become the most cost-effective method for generating compute within the next two to three years. The goal is to develop a 100-gigawatt orbital computing capacity, which the company claims is essential for scaling artificial intelligence to a "planetary" level.

Financial Impact and IPO Outlook

The transaction values SpaceX at approximately USD 1 trillion and xAI at USD 250 billion. Analysts view the acquisition as a significant precursor to a potential initial public offering (IPO) for SpaceX, which could occur as early as mid-2026. The combined company would enter the public markets as one of the most valuable technology entities in history.

While the merger offers significant technical synergies, it also integrates xAI’s high operational costs into SpaceX's profitable balance sheet. Reports indicate that xAI has been spending roughly USD 1 billion per month on research and development, a "burn rate" that will now be supported by SpaceX’s robust revenue streams from government contracts and Starlink subscriptions.

Integration of X and Grok

As xAI had previously absorbed the social media platform X, the acquisition effectively places Musk’s real-time information platform under SpaceX control. The integration allows the Grok AI model to leverage a continuous stream of real-time data for training and inference, further distinguishing it from competitors like OpenAI and Google. SpaceX Acquires xAI: Elon Musk’s Companies to Form the Most Ambitious, Vertically Integrated Innovation Engine

The consolidation also simplifies Musk’s complex corporate empire, though it is expected to face regulatory scrutiny. Critics have raised questions regarding data governance and the potential for a technological monopoly spanning telecommunications, space exploration, and artificial intelligence.

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(The above story first appeared on LatestLY on Feb 04, 2026 09:45 AM IST. For more news and updates on politics, world, sports, entertainment and lifestyle, log on to our website latestly.com).