Elon Musk’s SpaceX in merger talks with xAI ahead of

Elon Musk’s SpaceX in merger talks with xAI ahead of

Elon Musk’s SpaceX and xAI are in discussions to merge ahead of a blockbuster public providing deliberate for later this 12 months.

The mixture would convey Musk’s rockets, Starlink satellites, the X social media platform and Grok AI chatbot under one roof, according to an individual briefed on the matter and two current company filings seen by Reuters.

The plan, which Reuters is reporting completely, would give contemporary momentum to SpaceX’s effort to launch data facilities into orbit as Musk battles for supremacy in the quickly escalating AI race against tech giants like Google, Meta and OpenAI.

Elon Musk’s SpaceX and xAI are in discussions to merge ahead of a blockbuster public providing deliberate for later this 12 months. AFP by way of Getty Images

Musk, the world’s richest man, is the CEO of each the personal area company SpaceX and the artificial intelligence company xAI, which controls his social media platform X.

He also runs electrical automaker Tesla, tunnel company The Boring Co. and neurotechnology company Neuralink.

Musk, SpaceX, and xAI didn’t reply to requests for remark.

Under the proposed merger, shares of xAI can be exchanged for shares in SpaceX. Two entities have been arrange in Nevada to facilitate the transaction, the individual said.

Reuters couldn’t decide the worth of the deal, its main rationale, or its potential timing.

Corporate filings in Nevada present that those entities had been arrange on January 21. One of them, a restricted legal responsibility company, lists SpaceX and Bret Johnsen, the company’s chief monetary officer, as managing members, while the other lists Johnsen as the company’s only officer, the filings present.

The filings don’t include extra data about the function of the corporations or their position in any deal.

Elon Musk provides a tour to Donald Trump in November 2024 in Brownsville, Texas. Getty Images

Johnsen didn’t reply to a Reuters request for remark.

The individual, who requested anonymity because the discussions are confidential, said that some xAI executives could possibly be given the choice to obtain money instead of SpaceX inventory as half of the deal. A final settlement, however, hasn’t been signed, and the timing and construction of the transaction stay fluid, the individual cautioned.

SpaceX is already the world’s most worthwhile privately held company, last valued at $800 billion in a current insider share sale. xAI was valued at $230 billion in November, according to the Wall Street Journal. Reuters and other media have reported that SpaceX plans to go public some time this 12 months, with a valuation anticipated above $1 trillion.

xAI controls Musk’s social media platform X. Under the proposed merger, shares of xAI can be exchanged for shares in SpaceX. Two entities have been arrange in Nevada to facilitate the transaction. REUTERS

Data facilities in area

Through xAI, Musk is constructing out an enormous supercomputer for AI training in Memphis, Tenn., called Colossus. Last 12 months, SpaceX agreed to speculate $2 billion in xAI as half of the startup’s $5 billion fairness fundraising, the Wall Street Journal reported at the time.

Speaking in Davos, Switzerland, last week, the billionaire entrepreneur said “the lowest cost place to put AI will be in space. And that will be true within two years, maybe three at the latest.”

Space-based AI processing, powered by photo voltaic vitality, is aimed toward reducing the value of producing the computing energy that runs and trains AI fashions such as xAI’s Grok. Jeff Bezos’ Blue Origin announced a new high-capacity spine network of hundreds of satellites, while Google is researching space-based data facilities with its Project Suncatcher.

Jeff Bezos’ Blue Origin announced a new high-capacity spine network of hundreds of satellites. Getty Images

Building data facilities in area stays a dangerous proposition, particularly with AI funding evolving so quickly and often unpredictably. Analysts and some trade executives have questioned whether or not the envisioned cuts in vitality consumption are price the added prices of tailoring those programs for area.

Folding xAI into SpaceX might enhance the company’s footing for major protection contracts at the Pentagon, which has sought to ramp up AI adoption in its navy networks, said Caleb Henry of area research and advisory agency Quilty Analytics.

Defense Secretary Pete Hegseth earlier this month visited SpaceX’s Starbase development web site in Texas, the place he said xAI’s language mannequin and its chat platform Grok will likely be built-in into navy networks as half of the Pentagon’s “AI acceleration strategy,” aimed toward dashing up the navy’s decision-making and planning.

xAI has a contract price as a lot as $200 million to supply Grok merchandise to the Pentagon.

Starlink and its national safety variant Starshield already rely closely on artificial intelligence, such as for automated satellite tv for pc maneuvers in orbit. Starshield, under a contract with a US intelligence company, is constructing a network of a whole lot of labeled satellites outfitted with different sensors that are anticipated to make use of AI to assist observe transferring targets on Earth.

SpaceX’s Starbase development web site in Texas, the place he said xAI’s language mannequin and its chat platform Grok will likely be built-in into navy networks. AFP by way of Getty Images

Latest merger between Musk corporations

The deal wouldn’t be Musk’s first effort to mix companies he controls. In 2025, he folded social media platform X into xAI in a share swap that gave the artificial-intelligence startup entry to the platform’s data and distribution. Before that in 2016, he used Tesla inventory to purchase his solar-energy company SolarCity.

Earlier this month, xAI raised $20 billion in an upsized Series E funding round, exceeding its $15 billion goal at a valuation of $230 billion. Tesla, Musk’s electrical automotive company, on Wednesday said it agreed to make investments about $2 billion in xAI.

Founded in 2002, SpaceX disrupted the global area trade with its reusable Falcon rockets, which proved important to the swift launch of Starlink, a satellite tv for pc broadband network now consisting of hundreds of satellites in area.

SpaceX has lined up banks for an IPO that might come as early as this 12 months.

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