Elon Musk announced on Monday that SpaceX has taken over his artificial intelligence venture xAI, bringing together his space and AI businesses in what is being described as a historic and record-breaking deal. The move combines SpaceX’s rocket and satellite operations with xAI, the company behind the Grok chatbot.
The merger is seen as one of the boldest technology tie-ups to date, linking a major space and defence contractor with a rapidly expanding AI firm that relies heavily on advanced chips, massive data centres and high energy use. Industry watchers say the deal could significantly strengthen SpaceX’s plans in the data-centre space as competition heats up with global AI players such as Google, Meta, OpenAI and Amazon-backed Anthropic.
According to people familiar with the transaction, the deal values SpaceX at around $1 trillion, while xAI is pegged at $250 billion. Under the agreement, xAI shareholders will receive 0.1433 shares of SpaceX for each xAI share they own. Some senior executives at xAI may choose a cash payout instead, priced at $75.46 per share.
Calling the merger a major milestone, Musk said the move represents a new phase in both companies’ missions, aimed at pushing the boundaries of intelligence and space exploration together.
The acquisition has reportedly broken the long-standing global M&A record set in 2000, when Vodafone acquired Germany’s Mannesmann for $203 billion. Sources say shares of the combined SpaceX-xAI entity are expected to be priced at roughly $527 each.
SpaceX, already the world’s most valuable private company, was last valued at $800 billion during an insider share sale, while xAI was valued at $230 billion late last year. The merger comes at a time when SpaceX is also preparing for a potential blockbuster public listing that could value the company at more than $1.5 trillion.
The deal further tightens Musk’s expanding business empire — often informally referred to as the “Muskonomy” — which includes Tesla, Neuralink and the Boring Company. Analysts say the integration could allow Starlink to act not just as a revenue generator but also as a global platform for AI services and data distribution.
However, the transaction may attract regulatory attention, particularly due to Musk’s leadership roles across multiple companies and SpaceX’s extensive contracts with US government agencies, including Nasa and the Department of Defence.
Neither SpaceX nor xAI immediately commented beyond Musk’s announcement.