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SpaceX acquires xAI to build orbital data centers for AI

Elon Musk merges SpaceX and xAI to combine rocket technology and artificial intelligence, targeting space-based data processing infrastructure

SpaceX acquires xAI to build orbital data centers for AI as part of a merger aimed at developing space-based computing infrastructure. The deal combines SpaceX’s rocket and launch capabilities with xAI’s artificial intelligence technology, creating what Elon Musk described as the most ambitious vertically integrated innovation engine on Earth and beyond.

The move comes as funding for artificial intelligence development, driven by major technology companies, begins to show signs of pressure. SpaceX acquires xAI to build orbital data centers for AI while planning a constellation of satellites designed to function as orbital data centers powered by solar energy. According to Musk, meeting the growing energy demand of AI processing on Earth would create significant strain on the environment and infrastructure.

By using near-constant solar energy in orbit and reducing operational and maintenance costs, Musk said the satellite network could transform the scalability of AI processing capacity.

As part of the strategy behind why SpaceX acquires xAI to build orbital data centers for AI, the company aims to deploy up to one million satellites using its Starship rocket. The company expects Starship to eventually reach a launch rate of one flight per hour with payloads of up to 200 tons. The company did not disclose financial terms of the acquisition or a timeline for the initial satellite deployment.

According to Bloomberg, the merged entity could be valued at approximately $1.25 trillion. The agreement further expands Musk’s business ecosystem, which already includes Tesla and the social media platform X, formerly Twitter. Musk previously merged X with xAI after acquiring Twitter in late 2022. xAI, which develops the Grok chatbot, was valued at $230 billion in a January funding round.

The combined company is expected to consolidate capital, computing infrastructure, and engineering talent as Musk advances his long-term goal of deploying artificial intelligence data centers in space. U.S. media reports suggest SpaceX may be considering an initial public offering around mid-June that could raise up to $50 billion.

SpaceX currently dominates the commercial launch market with reusable rockets and operates the world’s largest satellite constellation through Starlink. Musk had previously opposed a SpaceX IPO, arguing that public market pressure for short-term financial returns conflicted with his long-term goal of enabling Mars colonization. However, the company’s latest priorities, including further development of Starship for future missions to the Moon and Mars, are expected to require substantial new investment.

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