SpaceX has acquired artificial intelligence startup xAI in a deal that media reports estimate values the combined business at approximately $1.2tn, marking one of the most far-reaching technology mergers to date. The companies did not disclose the financial terms of the transaction.
The acquisition unites two ventures founded by Elon Musk, further consolidating his portfolio across space launch technology, satellite communications, artificial intelligence and real-time information platforms. The combined entity is expected to tightly integrate AI development with SpaceX’s launch systems and satellite infrastructure.
In a joint statement, the companies said the merger would create a “vertically integrated innovation engine” spanning rockets, space-based internet, direct-to-mobile connectivity, artificial intelligence and real-time data systems. They described the transaction as a transformative step in their long-term vision, characterising it as the beginning of an entirely new phase rather than a continuation of existing efforts.
The statement pointed to the growing pressure AI places on Earth-based infrastructure, noting that advanced AI models require vast data centres that consume significant electricity and cooling resources. According to the companies, meeting future global AI power demand on Earth alone would lead to unsustainable environmental and social costs.
To address this challenge, SpaceX and xAI said they are pursuing space-based AI computing as a long-term solution. By deploying data centres in orbit powered by near-continuous solar energy, the companies believe they can significantly lower operating costs while dramatically expanding computing capacity.
Central to this strategy is SpaceX’s Starship rocket, designed to deliver large payloads to orbit at high launch rates. The company said Starship will begin deploying next-generation Starlink satellites this year, each offering more than 20 times the capacity of current satellites and enabling full global direct-to-mobile cellular coverage.
The companies estimate that large-scale deployment of AI-enabled satellite constellations could add hundreds of gigawatts of computing power annually, with the potential to scale to terawatt-level capacity over time. Such capabilities, they said, would move humanity closer to a Kardashev Type II civilisation, able to harness a substantial portion of the Sun’s energy.
Looking beyond Earth orbit, the merged organisation outlined ambitions to support sustained operations on the Moon and, eventually, self-sufficient settlements on Mars. According to the statement, space-based AI infrastructure could help finance and accelerate humanity’s expansion throughout the solar system, positioning the SpaceX–xAI combination as a foundational element of a future multi-planetary civilisation.
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