Musk Merges Space and AI Ambitions as SpaceX Acquires xAI in Record-Breaking Deal

NEW YORK: Elon Musk said on Monday that SpaceX has acquired his artificial intelligence startup xAI in a landmark deal that brings together his space and AI ventures, marking one of the most ambitious mergers in the technology sector to date. The transaction, first reported by Reuters last week, unites the world’s most valuable private space company with the developer of the Grok chatbot, whose rapid growth has been driven by heavy investments in chips, data centers and energy. The move is expected to strengthen SpaceX’s data-center ambitions as Musk intensifies competition with AI heavyweights including Alphabet’s Google, Meta, Amazon-backed Anthropic and OpenAI. According to a person familiar with the matter, the deal values SpaceX at $1 trillion and xAI at $250 billion, making it the largest mergers and acquisitions transaction ever recorded. That record had stood for more than 25 years, since Vodafone’s $203 billion takeover of Germany’s Mannesmann in 2000, according to LSEG data. “This marks not just the next chapter, but the next book in SpaceX and xAI’s mission,” Musk said, describing the combined vision as one aimed at understanding the universe and extending “the light of consciousness to the stars.” Sources said the merged entity is expected to price shares at about $527 each. SpaceX was already the world’s most valuable privately held company, recently valued at $800 billion in an insider share sale, while xAI was last valued at $230 billion in November, according to the Wall Street Journal. The merger comes as SpaceX prepares for a potential blockbuster initial public offering later this year, which could value the company at more than $1.5 trillion, according to people familiar with the plans. SpaceX, xAI and Musk did not immediately respond to requests for comment. The deal further consolidates Musk’s sprawling business empire—sometimes referred to by investors as the “Muskonomy”—which includes Tesla, Neuralink and the Boring Company. Musk has a track record of integrating his ventures: last year he folded social media platform X into xAI via a share swap, and in 2016 Tesla acquired SolarCity using its stock. However, the agreement may attract scrutiny from regulators and investors over governance, valuation and potential conflicts of interest, given Musk’s overlapping leadership roles and the possibility of shared personnel, technology and contracts. SpaceX’s extensive federal contracts with NASA, the US Department of Defense and intelligence agencies could also subject the deal to national security and regulatory reviews.