The Deal
SpaceX is in advanced talks to merge with xAI, Bloomberg reported February 2, with some investors already notified. Two Nevada entities formed January 21 to structure the transaction. Musk appeared to confirm via positive X response, though Reuters notes no deal is guaranteed.
The move follows Musk's established pattern: Tesla-SolarCity in 2016, xAI-X in 2025, both share-based consolidations. Discussions also touch on potential Tesla involvement before SpaceX's planned 2026 IPO.
The Stack
The synergies are real. xAI's Grok LLM holds a U.S. DoD contract worth up to $200M. SpaceX already uses AI for Starlink and Starshield automation, plus national security applications. Musk's vision: space infrastructure enabling scalable AI compute via solar energy.
A merged entity would unify rockets, satellites, the X platform, and Grok AI - what one YouTube analysis called a "loosely connected stack" now potentially formalized.
The Numbers
Combined valuation could reach $3T if Tesla joins. xAI brings its $200M DoD contract. SpaceX brings established launch capabilities and Starlink's commercial satellite network. The IPO timeline adds urgency - structure the deal before going public.
What This Means
For enterprise tech leaders watching aerospace and AI convergence, this consolidation signals where compute infrastructure is heading. Not cloud regions in data centers, but orbital compute enabled by launch capability and space-based power.
The precedents matter here. Tesla-SolarCity faced criticism but gave Tesla energy storage and solar expertise. xAI-X integration happened quietly in 2025. Musk's consolidation playbook is consistent: vertical integration via share swaps, built around his control.
The real question: can a merged SpaceX-xAI-potentially-Tesla entity deliver on the orbital AI compute vision, or will integration challenges mirror past over-promises? History suggests Musk's companies eventually ship - just not always on the timeline announced.
We'll see. The 2026 IPO deadline focuses minds.