Elon Musk’s SpaceX and synthetic intelligence startup xAI are in discussions over a possible merger forward of a deliberate public providing later this 12 months, Reuters reported citing an individual aware of the matter and two latest firm filings reviewed by it.
The proposed mixture would carry SpaceX’s launch autos and Starlink satellite tv for pc community along with Musk’s X social media platform and xAI’s Grok chatbot below a single company construction, the supply mentioned. Reuters is reporting the talks completely.
Underneath the proposed construction, shares of xAI can be exchanged for shares in SpaceX, the supply added, the information outlet said. Two Nevada-based entities have been set as much as facilitate the transaction. Some xAI executives could also be provided money as a substitute of SpaceX inventory, although no remaining settlement has been signed and the timing and construction of the deal stay fluid.
Reuters mentioned it couldn’t independently decide the valuation of the transaction, its major strategic rationale, or when it could be accomplished.
Increase to space-based AI ambitions
The merger talks come as Musk pushes aggressively into synthetic intelligence, positioning SpaceX as a key platform for deploying information centres in orbit to energy AI workloads.
Talking on the World Financial Discussion board in Davos final week, Musk mentioned “the bottom value place to place AI will probably be in area,” predicting that space-based AI infrastructure might turn into viable inside two to a few years.
SpaceX has already dedicated $2 billion to xAI as a part of a $5 billion fairness fundraising spherical final 12 months, the Wall Road Journal beforehand reported. Via xAI, Musk can be constructing a big AI supercomputer referred to as “Colossus” in Memphis, Tennessee.
Business gamers are more and more exploring space-based computing. Jeff Bezos’ Blue Origin has introduced plans for a high-capacity satellite tv for pc spine community, whereas Google is researching orbital information centres by its Undertaking Suncatcher initiative.
Defence contracts and strategic leverage
Combining shahI with SpaceX might strengthen the corporate’s place in securing U.S. defence contracts, mentioned Caleb Henry, director of analysis at Quilty Analytics.
“The Pentagon is pushing quickly into AI-enabled methods, and having that functionality vertically built-in with satellite tv for pc infrastructure is a strategic benefit,” Henry instructed Reuters.
xAI has a contract price as much as $200 million to produce Grok AI merchandise to the Pentagon. SpaceX’s Starlink and its defence-focused Starshield unit already rely closely on synthetic intelligence for satellite tv for pc operations, together with automated manoeuvring in orbit.
Starshield can be creating a categorized satellite tv for pc community for a U.S. intelligence company, which is anticipated to make use of AI-enabled sensors to trace targets on Earth.
Valuations and IPO plans
SpaceX is at present the world’s most beneficial privately held firm, valued at about $800 billion in a latest insider share sale, in keeping with sources aware of the transaction. xAI was valued at $230 billion in November, the Wall Road Journal reported.
Reuters and different media have reported that SpaceX is getting ready for an preliminary public providing as early as this 12 months, with an anticipated valuation exceeding $1 trillion. SpaceX has already lined up banks for the potential IPOsources have mentioned.
Earlier this month, xAI raised $20 billion in an upsized Sequence E funding spherical, exceeding its authentic goal of $15 billion. Tesla disclosed on Wednesday that it had agreed to take a position about $2 billion in xAI.
Not Musk’s first inside deal
The potential merger would mark the newest in a collection of transactions combining Musk-controlled corporations. In 2025, Musk folded X into xAI by way of a share swap, giving the AI startup entry to the platform’s information and distribution. In 2016, Tesla acquired Musk’s photo voltaic agency SolarCity in an all-stock deal.
Based in 2002, SpaceX reworked the area business with its reusable Falcon rockets, enabling speedy deployment of Starlink, which now consists of hundreds of satellites in orbit.
Musk is the CEO of SpaceX and xAI, and in addition leads Tesla, and Neuralink.