SpaceX and xAI merge ahead of potential $50 billion IPO

Investing.com -- Elon Musk is merging SpaceX with his artificial intelligence startup xAI, according to a Monday announcement from the company. The proposed transaction aims to consolidate the billionaire’s dual ambitions of dominating orbital infrastructure and generative intelligence under a single corporate umbrella.

The combined entity is expected to carry a valuation of $1.25 trillion, with shares priced at approximately $527 each, Bloomberg reported shortly ahead of the release. The news comes as SpaceX explores a historic initial public offering that could raise $50 billion.

The deal unifies two of the world’s most valuable private companies and formalizes the increasingly blurred lines between Musk’s ventures. In 2025, Musk merged xAI, his AI startup which operates the popular Grok chatbot, with X, the social media platform formerly known as Twitter that Musk bought in 2022.

Filings from Friday reveal that SpaceX is seeking permission to launch one million satellites to support Musk’s previously reported vision of orbital data centers. This infrastructure would allow the combined company to bypass terrestrial energy constraints and provide the massive compute required for physical AI as another one of Musk’s companies, Tesla Inc (NASDAQ: TSLA), seeks to employ AI-embedded robots at a mass scale.

"Current advances in AI are dependent on large terrestrial data centers, which require immense amounts of power and cooling. Global electricity demand for AI simply cannot be met with terrestrial solutions, even in the near term, without imposing hardship on communities and the environment," Musk said in the announcement, before adding, "In the long term, space-based AI is obviously the only way to scale."

Investors have long speculated that Musk’s end goal could be a mass-merging of his companies, including Tesla, SpaceX, and xAI. Walter Isaacson, Musk’s biographer, predicted in May 2025 that Tesla and xAI would merge, as Musk’s physical AI ambitions require integrating real-world data from electric vehicles and robotics.

“I think it’s going to happen,” Isaacson said at the time, noting that Musk wants to combine data from chatbots with "all the videos from Teslas." He added that "He feels he has to [have] control in a company that’s doing [physical] AI,” highlighting the billionaire’s preference for centralized oversight.

Bloomberg previously reported SpaceX was in talks with Tesla over a potential merger, though it remains unclear whether or not discussions are paused amid the potential xAI merger and IPO plans.

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