SpaceX Acquires xAI Ahead of Long-Awaited IPO

This article first appeared on GuruFocus.

SpaceX announced the acquisition of xAI. The transaction further connects Musk’s business empire as xAI accelerates spending to build large-scale artificial intelligence models and infrastructure. It values the combined entity at approximately $1.25 trillion. Under the terms of the agreement, the newly merged company’s shares would be priced at $527 each.

The strategic objective of the merger is the deployment of “orbital data centers.” SpaceX filed with the FCC last Friday, for authorization to launch a constellation of up to one million satellites. Though, SpaceX said it is unlikely to deploy anything close to that number. These satellites will use near-constant solar energy to run xAI’s compute-heavy models, which Musk estimates will become the “lowest cost way to generate AI compute” within two to three years.

This merger matters now because it provides a clear exit strategy for xAI investors and stabilizes the startup’s balance sheet through SpaceX’s profitable launch and Starlink operations. The consolidation is widely viewed as the final step before a massive $50 billion IPO planned for June 2026. By unifying AI, space internet, and rocket technology, Musk is positioning the new SpaceX-xAI entity to compete directly with the data center scale of Alphabet (NASDAQ:GOOG) (NASDAQ:GOOGL) and Meta (NASDAQ:META).