SpaceX and xAI in merger talks ahead of historic $1.5 trillion IPO, eyeing orbital data centers

Elon Musk's SpaceX and xAI in talks to merge, report says | TechCrunch

SpaceX and xAI, both companies led by Elon Musk, could merge ahead of a planned SpaceX IPO this year, according to a report from Reuters. This would bring products like the Grok chatbot, X platform, Starlink satellites, and SpaceX rockets together under one corporation. Company representatives have not discussed this possibility in public. However, recent filings show that two new corporate entities were established in Nevada on January 21, which are called K2 Merger Sub Inc. and K2 Merger Sub 2 LLC. Combining the two companies could allow xAI to put its data centers in space, something Musk has said he wants. This move would also fall in line with Musk's recent strategies to consolidate his companies. Last year, SpaceX agreed to invest $2 billion in xAI, according to The Wall Street Journal, and earlier this week, Tesla (also led by Musk) revealed it, too, invested $2 billion in the AI startup. Last year, xAI bought X in a deal that Musk said valued xAI at $80 billion and X at $33 billion. SpaceX, which has been around since 2002, reportedly launched a secondary sale that valued it at $800 billion, making it the most valuable private company in the U.S.

Elon Musk's SpaceX reportedly mulling a merger with xAI

I agree my information will be processed in accordance with the Scientific American and Springer Nature Limited Privacy Policy. We leverage third party services to both verify and deliver email. By providing your email address, you also consent to having the email address shared with third parties for those purposes. Elon Musk's SpaceX and his artificial intelligence start-up xAI are reportedly mulling a merger, a move that would bring SpaceX's rockets and satellite Internet subsidiary Starlink under a single umbrella with xAI -- which oversees the social media platform X and the chatbot Grok. The two wings of Musk's sprawling tech empire could merge ahead of a plan to take SpaceX public later this year, according to Reuters, which cited and anonymous source and recent company filings. SpaceX's initial public offering could see the company valued at $1.5 trillion, according to the Financial Times. A merger with xAI could boost Musk's plan to use SpaceX's still-in-development Starship rocket to launch orbital AI data centers, experts have speculated. Musk and other AI leaders are increasingly bullish on space as an answer to all the problems with data centers: Though costly to build and expensive to power, increasingly sprawling data centers are central to many AI company's growth strategies. As demand for AI grows, earthbound data centers -- and power supplies -- may not be able to keep up. Data centers in orbit, however, would have practically unlimited access to solar energy -- although such hardware would also come with its limits. If you're enjoying this article, consider supporting our award-winning journalism by subscribing. By purchasing a subscription you are helping to ensure the future of impactful stories about the discoveries and ideas shaping our world today. SpaceX and xAI did not immediately respond to a request for comment.

Elon Musk's SpaceX and xAI are reportedly holding merger talks

Two Elon Musk companies are reportedly planning to merge. On Thursday, Reuters reported that SpaceX and xAI are holding merger talks ahead of a planned IPO. Part of their plan is to launch AI data centers into space (but unfortunately, only as far as Earth's orbit). Last week, it was reported that Musk planned to take SpaceX public despite having once said it wouldn't happen until the company had a presence on Mars. Now, the IPO could happen as early as this year. Shares of xAI would reportedly be exchanged for shares in SpaceX under the merger. Reuters reports that two entities were set up in Nevada on January 21 to facilitate the deal. If the idea of two Musk companies becoming one sounds familiar, that's because it happened less than a year ago. In March 2025, xAI bought X, putting Grok (known for nonconsensual "nudifying" images) and X (infamous for being a far-right hellscape) together under one unholy roof. The latest idea Musk is pitching is blasting AI data centers off into space. At last week's gathering of the rich and powerful in Davos, Switzerland, he 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." The idea is that data centers in orbit could harness solar power and reduce cooling costs. However, industry analysts and executives consider it a risky bet, questioning whether the savings would warrant the massive investment. If or when the AI bubble bursts, the plan could go down in flames -- if not literally, then figuratively.

Elon to Merge SpaceX and xAI

Earlier this week, news emerged that SpaceX CEO Elon Musk was considering taking his private space company public on his birthday in June at a staggering valuation of $1.5 trillion, making it easily the largest IPO in history. Now, as Reuters reports, Musk is hoping to go one step further, merging his AI startup xAI with SpaceX ahead of the IPO -- a baffling plan that raises far more questions than answers. For now, we have no idea why the deal is even on the table, let alone the financial specifics. The narrative will likely have something to do with SpaceX helping xAI launch data centers into Earth's orbit -- an idea that AI tech leaders have become obsessed with as of late, despite experts warning it makes little sense, citing concerns over economic viability and bandwidth limitations. "The lowest cost place to put AI will be in space," Musk said during an interview in Davos last week. "And that will be true within two years, maybe three at the latest." Other companies, most notably Jeff Bezos' Blue Origin, are also looking to launch thousands of satellites that will ultimately serve data centers from space. Google CEO Sundar Pichai has also been infatuated by the idea, arguing that bringing data centers closer to the Sun could allow them to reap practically unlimited amounts of solar energy while in orbit. According to Reuters, two entities in Nevada, including a limited liability company that lists SpaceX chief financial officer Bret Johnsen, have been set up to facilitate the swapping of xAI and SpaceX shares. A source told the news agency that xAI executives could receive cash instead of SpaceX stock as part of the deal. SpaceX already agreed to invest $2 billion in xAI last year as part of the startup's fundraising round. Both xAI and SpaceX have secured major defense contracts with the Pentagon. Just earlier this year, defense secretary Pete Hegseth revealed that Musk's AI chatbot Grok will be operating inside Pentagon networks. SpaceX is also developing a national security version of its Starlink broadband internet network, called Starshield, which is expected to use AI to track targets back on the surface, according to Reuters. Musk is no stranger to merging his own businesses. Last year, for instance, he folded his social media echo chamber X into xAI. His embattled EV maker, Tesla, is also seemingly getting in on the fun, announcing that it had agreed to invest $2 billion in xAI earlier this week, after reporting some disastrous earnings.

2 of Elon Musk's Companies Could Be Merging Ahead of $1.5 Trillion IPO

The deal comes as SpaceX, which is currently the most valuable privately held company at $800 billion, eyes a June public offering with an expected valuation of around $1.5 trillion. An Advantage in the Race For Computing Power The merger could allow the company to send its data centers into orbit, which is critical to Musk's odds of pulling ahead in the AI race against major tech companies like Google, Meta, and OpenAI. During the World Economic Forum in Davos, Switzerland last week, Musk said "the lowest cost place to put AI will be space. And that will be true within two years, maybe three at the latest."

SpaceX in merger talks with xAI ahead of potential blockbuster IPO:...

Elon Musk's SpaceX and xAI are in discussions to merge ahead of a blockbuster public offering planned for later this year. The combination would bring Musk's rockets, Starlink satellites, the X social media platform and Grok AI chatbot under one roof, according to a person briefed on the matter and two recent company filings seen by Reuters. The plan, which Reuters is reporting exclusively, would give fresh momentum to SpaceX's effort to launch data centers into orbit as Musk battles for supremacy in the rapidly escalating AI race against tech giants like Google, Meta and OpenAI. Musk, the world's richest man, is the CEO of both the private space company SpaceX and the artificial intelligence company xAI, which controls his social media platform X. He also runs electric automaker Tesla, tunnel company The Boring Co. and neurotechnology company Neuralink. Musk, SpaceX, and xAI did not respond to requests for comment. Under the proposed merger, shares of xAI would be exchanged for shares in SpaceX. Two entities have been set up in Nevada to facilitate the transaction, the person said. Reuters could not determine the value of the deal, its primary rationale, or its potential timing. Corporate filings in Nevada show that those entities were set up on January 21. One of them, a limited liability company, lists SpaceX and Bret Johnsen, the company's chief financial officer, as managing members, while the other lists Johnsen as the company's only officer, the filings show. The filings don't contain additional information about the purpose of the companies or their role in any deal. Johnsen did not respond to a Reuters request for comment. The person, who requested anonymity because the discussions are confidential, said that some xAI executives could be given the option to receive cash instead of SpaceX stock as part of the deal. A final agreement, however, hasn't been signed, and the timing and structure of the transaction remain fluid, the person cautioned. SpaceX is already the world's most valuable privately held company, last valued at $800 billion in a recent 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 year, with a valuation expected above $1 trillion. Through xAI, Musk is building out a massive supercomputer for AI training in Memphis, Tenn., called Colossus. Last year, SpaceX agreed to invest $2 billion in xAI as part of the startup's $5 billion equity 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 solar energy, is aimed at cutting the cost of generating the computing power that runs and trains AI models such as xAI's Grok. Jeff Bezos' Blue Origin announced a new high-capacity backbone network of thousands of satellites, while Google is researching space-based data centers with its Project Suncatcher. Building data centers in space remains a risky proposition, especially with AI investment evolving so rapidly and often unpredictably. Analysts and some industry executives have questioned whether the envisioned cuts in energy consumption are worth the added costs of tailoring those systems for space. Folding xAI into SpaceX could boost the company's footing for major defense contracts at the Pentagon, which has sought to ramp up AI adoption in its military networks, said Caleb Henry of space research and advisory firm Quilty Analytics. Defense Secretary Pete Hegseth earlier this month visited SpaceX's Starbase development site in Texas, where he said xAI's language model and its chat platform Grok will be integrated into military networks as part of the Pentagon's "AI acceleration strategy," aimed at speeding up the military's decision-making and planning. xAI has a contract worth as much as $200 million to provide Grok products to the Pentagon. Starlink and its national security variant Starshield already rely heavily on artificial intelligence, such as for automated satellite maneuvers in orbit. Starshield, under a contract with a US intelligence agency, is building a network of hundreds of classified satellites equipped with different sensors that are expected to use AI to help track moving targets on Earth. The deal would not be Musk's first effort to combine businesses he controls. In 2025, he folded social media platform X into xAI in a share swap that gave the artificial-intelligence startup access to the platform's data and distribution. Before that in 2016, he used Tesla stock to buy his solar-energy company SolarCity. Earlier this month, xAI raised $20 billion in an upsized Series E funding round, exceeding its $15 billion target at a valuation of $230 billion. Tesla, Musk's electric car company, on Wednesday said it agreed to invest about $2 billion in xAI. Founded in 2002, SpaceX disrupted the global space industry with its reusable Falcon rockets, which proved vital to the swift launch of Starlink, a satellite broadband network now consisting of thousands of satellites in space. SpaceX has lined up banks for an IPO that could come as early as this year.

Report: SpaceX and xAI in merger talks ahead of planned IPO By Investing.com

Investing.com -- Elon Musk's SpaceX and xAI are discussing a potential merger before a major initial public offering planned for later this year, according to a Reuters report on Thursday. The combination would unite Musk's rocket business, Starlink satellite network, X social media platform, and Grok AI chatbot under a single corporate structure, Access breaking news faster with institutional-grade feeds, immediate stock impact metrics, and analyst response tracking -- get 55% off InvestingPro. The merger would also strengthen SpaceX's efforts to launch orbital data centers as Musk competes in the intensifying artificial intelligence sector against competitors like Google, Meta and OpenAI. Under the proposed arrangement, xAI shares would be exchanged for SpaceX shares, with two Nevada entities established to facilitate the transaction. Some xAI executives might receive the option to take cash instead of SpaceX stock as part of the deal. No final agreement has been signed, with the timing and structure of the transaction still subject to change. SpaceX currently holds the title of the world's most valuable private company, with a recent valuation of $800 billion from an insider share sale. xAI was valued at $230 billion in November, according to the Wall Street Journal.

Musk's SpaceX in merger talks with xAI ahead of planned IPO, source says

NEW YORK, Jan 29 (Reuters) - Elon Musk's SpaceX and xAI are in discussions to merge ahead of a blockbuster public offering planned for later this year. The combination would bring Musk's rockets, Starlink satellites, the X social media platform and Grok AI chatbot under one roof, according to a person briefed on the matter and two recent company filings seen by Reuters. The plan, which Reuters is reporting exclusively, would give fresh momentum to SpaceX's effort to launch data centers into orbit as Musk battles for supremacy in the rapidly escalating AI race against tech giants like Google, Meta and OpenAI. Musk, the world's richest man, is the CEO of both the private space company SpaceX and the artificial intelligence company xAI, which controls his social media platform X. He also runs electric automaker Tesla, tunnel company The Boring Co. and neurotechnology company Neuralink. Musk, SpaceX, and xAI did not respond to requests for comment. Under the proposed merger, shares of xAI would be exchanged for shares in SpaceX. Two entities have been set up in Nevada to facilitate the transaction, the person said. Reuters could not determine the value of the deal, its primary rationale, or its potential timing. Corporate filings in Nevada show that those entities were set up on January 21. One of them, a limited liability company, lists SpaceX and Bret Johnsen, the company's chief financial officer, as managing members, while the other lists Johnsen as the company's only officer, the filings show. The filings don't contain additional information about the purpose of the companies or their role in any deal. Johnsen did not respond to a Reuters request for comment. The person, who requested anonymity because the discussions are confidential, said that some xAI executives could be given the option to receive cash instead of SpaceX stock as part of the deal. A final agreement, however, hasn't been signed, and the timing and structure of the transaction remain fluid, the person cautioned. SpaceX is already the world's most valuable privately held company, last valued at $800 billion in a recent 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 year, with a valuation expected above $1 trillion. DATA CENTERS IN SPACE Through xAI, Musk is building out a massive supercomputer for AI training in Memphis, Tennessee, called Colossus. Last year, SpaceX agreed to invest $2 billion in xAI as part of the startup's $5 billion equity 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 solar energy, is aimed at cutting the cost of generating the computing power that runs and trains AI models such as xAI's Grok. Jeff Bezos' Blue Origin announced a new high-capacity backbone network of thousands of satellites, while Google is researching space-based data centers with its Project Suncatcher. Building data centers in space remains a risky proposition, especially with AI investment evolving so rapidly and often unpredictably. Analysts and some industry executives have questioned whether the envisioned cuts in energy consumption are worth the added costs of tailoring those systems for space. Folding xAI into SpaceX could boost the company's footing for major defense contracts at the Pentagon, which has sought to ramp up AI adoption in its military networks, said Caleb Henry of space research and advisory firm Quilty Analytics. U.S. Defense Secretary Pete Hegseth earlier this month visited SpaceX's Starbase development site in Texas, where he said xAI's language model and its chat platform Grok will be integrated into military networks as part of the Pentagon's "AI acceleration strategy," aimed at speeding up the military's decision-making and planning. xAI has a contract worth as much as $200 million to provide Grok products to the Pentagon. Starlink and its national security variant Starshield already rely heavily on artificial intelligence, such as for automated satellite maneuvers in orbit. Starshield, under a contract with a U.S. intelligence agency, is building a network of hundreds of classified satellites equipped with different sensors that are expected to use AI to help track moving targets on Earth. LATEST MERGER BETWEEN MUSK COMPANIES The deal would not be Musk's first effort to combine businesses he controls. In 2025, he folded social media platform X into xAI in a share swap that gave the artificial-intelligence startup access to the platform's data and distribution. Before that in 2016, he used Tesla stock to buy his solar-energy company SolarCity. Earlier this month, xAI raised $20 billion in an upsized Series E funding round, exceeding its $15 billion target at a valuation of $230 billion. Tesla, Musk's electric car company, on Wednesday said it agreed to invest about $2 billion in xAI. Founded in 2002, SpaceX disrupted the global space industry with its reusable Falcon rockets, which proved vital to the swift launch of Starlink, a satellite broadband network now consisting of thousands of satellites in space. SpaceX has lined up banks for an IPO that could come as early as this year. (Reporting by Echo Wang and Joey Roulette; Additional reporting by Milanna Vinn, Sabrina Valle and David Jeans; Editing by Joe Brock, Dawn Kopecki and Michael Learmonth)