Elon Musk is combining SpaceX with his artificial intelligence startup xAI as the merged entity prepares for a massive IPO that could value the combined company at $1.25 trillion.
CNBC reports that Elon Musk has undertaken a significant consolidation of his business empire, revealing that SpaceX is acquiring his artificial intelligence company xAI in a deal that brings together two of his most valuable ventures. The transaction positions the merged entity for an IPO that Bloomberg reports could value the combined company at $1.25 trillion.
Musk disclosed the acquisition in a blog post on Monday, describing the creation of what he called “the most ambitious, vertically-integrated innovation engine on (and off) Earth, with AI, rockets, space-based internet,” along with the X social media platform. Public records filed with the state of Nevada and obtained by CNBC confirm that the deal closed on February 2, with Space Exploration Technologies Corp., SpaceX’s formal name, listed as the managing member of X.AI Holdings.
The merger represents the largest consolidation within Musk’s extensive portfolio of companies and unites two businesses that have experienced substantial growth in private market valuations. SpaceX conducted a secondary share sale last year at an $800 billion valuation, while xAI was valued at approximately $230 billion following a $20 billion funding round that concluded earlier this year.
The most recent xAI funding round attracted investment from major technology and financial institutions. Nvidia and Cisco Investments participated in the round, alongside long-standing Musk supporters including Valor Equity Partners, Stepstone Group, Fidelity, Qatar Investment Authority, Abu Dhabi’s MGX, and Baron Capital Group. Additionally, Tesla, Musk’s electric vehicle manufacturer and the primary source of his personal wealth, announced last week that it was investing roughly $2 billion into xAI.
Neither SpaceX nor xAI responded to inquiries about whether the merger might require regulatory review, including potential examination by the Committee on Foreign Investment in the United States, known as CFIUS.
This acquisition follows a similar consolidation move Musk made early last year when he merged xAI with his social network X, formerly known as Twitter. The combined xAI entity now faces regulatory investigations across multiple international jurisdictions following controversies involving its Grok AI tools, which enabled users to generate and distribute sexualized images of children and non-consensual intimate images of adults, predominantly women.
Breitbart News reported this morning that the Grok deepfake scandal took another turn when French authorities raided X offices in Paris:
“A search is under way by the cybercrime unit of the Paris prosecutor’s office, the national police cyber unit and Europol,” the office said in a post on X on Tuesday, further adding it would no longer be publishing on the network, telling users instead to “find us on LinkedIn and Instagram.”
It added in a statement that Musk and Linda Yaccarino had been summoned for voluntary questioning in April “in their capacity as de facto and de jure managers of the X platform at the time of the events.”
Despite these controversies, xAI has gained adoption within the U.S. government. In January, the Department of Defense began using Grok at the Pentagon, allowing information flowing through military intelligence databases to be analyzed using Grok alongside other AI systems such as Google’s Gemini. SpaceX currently maintains a significantly larger defense contracting presence than xAI, holding tens of billions of dollars worth of federal government contracts.
SpaceX, which Musk founded in 2002, has evolved into the dominant provider of orbital launch services through contracts with NASA and the Department of Defense. The company has developed reusable rocket technology and owns and operates Starlink, a satellite internet service with more than 9,000 satellites in orbit and approximately 9 million customers worldwide.
Musk launched xAI in 2023 as a potential rival to OpenAI, which initiated the generative artificial intelligence revolution with the November 2022 release of ChatGPT. Musk was among the co-founders of OpenAI when it began as a nonprofit AI research laboratory in 2015, but he departed in 2018. He is currently engaged in an intense legal dispute with OpenAI and its CEO Sam Altman.
According to Reuters, citing two sources familiar with the company’s financial performance, SpaceX generated an estimated $8 billion in profit on $15 billion to $16 billion in revenue during 2025. In contrast, xAI’s financial position is less secure as the company continues to burn through cash while attempting to build expensive infrastructure to compete with OpenAI and Google, both of which entered the AI race earlier and maintain leading positions in developing widely adopted AI models.
Musk frames the acquisition as part of a strategic long-term vision to establish data centers in space. SpaceX recently submitted a request to the Federal Communications Commission seeking authorization to launch up to 1 million satellites as part of its planned “orbital data centers.”
“My estimate is that within 2 to 3 years, the lowest cost way to generate AI compute will be in space,” Musk wrote in Monday’s announcement. “This cost-efficiency alone will enable innovative companies to forge ahead in training their AI models and processing data at unprecedented speeds and scales, accelerating breakthroughs in our understanding of physics and invention of technologies to benefit humanity.”
Read more at CNBC here.
Lucas Nolan is a reporter for Breitbart News covering issues of free speech and online censorship.
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