SpaceX has acquired xAI in a deal that values the combined company at $1.25 trillion ahead of a potential public offering, according to Bloomberg. Shares are expected to price at approximately $527 each.
The acquisition consolidates Musk's aerospace and artificial intelligence operations into a single entity. According to TechCrunch, the combined company plans to build AI data centers in space, leveraging SpaceX's satellite infrastructure. The Verge reports that X (formerly Twitter) is also part of the merger structure.
What this means in practice
For enterprise tech leaders evaluating AI infrastructure partnerships, this consolidation raises questions about vendor concentration risk. Organizations currently using xAI's services or considering SpaceX's Starlink for connectivity should assess how the merger affects service roadmaps and pricing.
The space-based data center strategy is ambitious but unproven at scale. While orbital infrastructure could theoretically address latency and cooling challenges, the practical timeline and costs remain unclear. History suggests treating announced capabilities differently from shipped capabilities.
Financial context
The $1.25T valuation comes as AI infrastructure players face increasing scrutiny over capital requirements and return timelines. This follows Oracle's recent announcement of a $50 billion fundraising plan to support its OpenAI infrastructure commitments, where the company has taken on $100 billion in debt for $300 billion in server commitments.
SpaceX CFO is scheduled to hold an investor call to discuss deal specifics, according to The Information. The Wall Street Journal confirms Musk announced the acquisition, though detailed integration plans and regulatory approvals remain pending.
Worth noting
This is Musk's second major corporate consolidation in recent years, following his acquisition of Twitter. Enterprise buyers evaluating long-term AI partnerships should factor in governance complexity when a single individual controls multiple interdependent technology platforms.
The IPO timeline and final valuation will depend on market conditions and regulatory review. We'll see.