Musk forges $1.25 trillion giant as SpaceX merges with xAI in historic AI–space deal

New Delhi: Elon Musk has merged SpaceX with xAI, forming a combined company valued at a staggering $1.25 trillion. The deal assigns a $1 trillion valuation to SpaceX and $250 billion to xAI, according to people familiar with the matter.

The all-stock transaction brings together rockets, satellites, artificial intelligence, and real-time digital platforms under one roof. In a statement, Musk said the goal is to build a vertically integrated innovation engine spanning AI, spaceflight, satellite internet, and direct-to-device communications. Employees were informed of the valuation in an internal memo, and the company is still expected to pursue an initial public offering later this year.

Musk said the merger is designed to accelerate breakthroughs by tightly linking computing power with space infrastructure. He believes that within a few years, running large AI workloads in orbit could become cheaper than on Earth, opening the door to faster model training and massive data processing.

The move deepens ties across Musk’s businesses. xAI already runs the chatbot Grok and previously combined operations with the social platform X. By folding xAI into SpaceX, Musk is pooling capital, engineering talent, and access to global connectivity.

One of the key components of the plan is the Starlink project by SpaceX, the satellite internet project that currently runs over 9,000 satellites. Starlink revenues have surpassed the sales at launch and are now a major source of capital to support the capital-intensive plans of xAI.

SpaceX has also submitted a request to make up to one million satellites in the future, which can only indicate how much central space-based infrastructure for AI is in the long-term strategy of Musk.

SpaceX remains Musk’s most consistent business. It is currently the only US company that routinely carries astronauts to and from the International Space Station and serves as a major launch provider for NASA and the US Department of Defence.

That steady government work, combined with Starlink’s growing cash flow, gives the merged company a rare mix of predictable revenue and moonshot ambition.

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xAI is an expensive operation, reportedly burning close to $1 billion a month as it races to compete in advanced artificial intelligence. The merger offers breathing room by tapping SpaceX’s balance sheet and infrastructure.

For Musk, this merger is a decisive bet on convergence. AI, satellites, rockets, and communications are no longer separate ventures. They are now parts of a single, trillion-dollar machine aimed at reshaping both Earth and space.