SpaceX has acquired xAI, Elon Musk’s fast-growing artificial intelligence venture, in a move designed to bring the billionaire entrepreneur’s AI, space and communications ambitions under a single corporate structure.

The deal unites the world’s most valuable private aerospace company with the developer of the Grok chatbot, marking one of the most striking corporate combinations to emerge from Silicon Valley in recent years. It also comes ahead of a widely reported blockbuster stock market listing later this year.

In a memo to staff, also published on X, Musk said the acquisition would create “the most ambitious, vertically integrated innovation engine on (and off) Earth”.

“By combining AI, rockets, space-based internet, direct-to-mobile communications and the world’s foremost real-time information platform, we can accelerate innovation across every domain,” he wrote.

The transaction deepens Musk’s strategy of fusing advanced AI with his space and satellite-internet empire, allowing SpaceX to tap into xAI’s computing power, data infrastructure and engineering talent. Industry observers say the integration could support long-term ambitions such as AI-driven satellite networks and even space-based data centres.

Last year, Musk used xAI to acquire X, formerly Twitter, folding the social media platform into his broader AI strategy. The New York Times reported that the combined xAI-X entity was valued at around $113bn at the time.

The latest move brings SpaceX, xAI, X and the Grok chatbot closer together ahead of a mooted initial public offering that would place much of Musk’s private empire under one listed umbrella. According to Bloomberg, the combined group could be valued at around $1.25 trillion, with shares potentially priced at about $527 each.

SpaceX, which designs and launches reusable rockets and operates the Starlink satellite broadband network, is estimated to have generated revenues of about $15.5bn last year. Separately, the company is reported to be exploring a capital raise of up to $50bn at a valuation of roughly $1.5 trillion — a figure that would eclipse Saudi Aramco’s record-breaking 2019 flotation.

Several global investment banks, including Bank of America, Goldman Sachs, JPMorgan Chase and Morgan Stanley, are said to be lining up for leading roles in the IPO, underlining investor appetite for Musk’s increasingly integrated vision of AI, space and communications.

While the scale and ambition of the deal are unprecedented, analysts note that the combination also brings together two capital-intensive businesses, both heavily reliant on advanced chips, data centres and energy. How effectively the merged group balances those costs — and convinces public market investors of its long-term profitability — will be closely watched in the months ahead.

Amy Ingham

Amy is a newly qualified journalist specialising in business journalism at Business Matters with responsibility for news content for what is now the UK’s largest print and online source of current business news.