SpaceX Acquires xAI in Record-Setting $1.25 Trillion Deal

Summary

SpaceX has acquired xAI in a landmark all-stock merger valuing the combined company at around $1.25 trillion, uniting Elon Musk’s space infrastructure with his fast-growing artificial intelligence business. The transaction creates one of the world’s most valuable private technology firms and is expected to face intense regulatory scrutiny due to SpaceX’s sensitive government contracts.

HAWTHORNE, Calif. — In a memo shared Monday, Elon Musk confirmed that SpaceX has absorbed his AI venture xAI, consolidating two of his most ambitious companies ahead of a planned SpaceX public offering later this year.

According to people familiar with the deal cited by Reuters, the combined company is valued at approximately $1.25 trillion, with SpaceX accounting for roughly $1 trillion and xAI around $250 billion.

Deal structure

Under the terms of the transaction:

• xAI shareholders will receive 0.1433 SpaceX shares for each xAI share held
• Some xAI executives are being offered a cash-out option of about $75.46 per share
• The implied SpaceX share price in the merger is roughly $527 per share

The structure allows Musk to consolidate his fastest-growing businesses without deploying cash while preparing the enlarged group for public markets.

Strategic rationale

The merger brings together:

• SpaceX’s rocket launch operations and Starlink satellite network
• xAI’s artificial intelligence models, including its Grok chatbot

The integration aims to combine global connectivity infrastructure with advanced AI systems — potentially supporting applications in communications, autonomous systems, large-scale computing and space operations.

SpaceX is expected to pursue a public listing later in 2026, with some analysts suggesting the merged entity could eventually command a valuation well above current private estimates.

Regulatory hurdles ahead

The transaction is likely to draw heightened scrutiny as SpaceX holds billions of dollars in contracts with NASA, the Pentagon and U.S. intelligence agencies.

Combining an AI company that processes massive datasets with a major defense contractor could trigger national security reviews focused on governance, data protection and corporate control.

Why this matters

Creates a private tech giant rivaling public megacaps — a $1.25 trillion valuation would place the company among the world’s most valuable firms

• Blends space infrastructure with AI power — potentially reshaping global connectivity and computing
• Signals Musk’s platform strategy — controlling rockets, satellites, networks and intelligence in one ecosystem
• Raises new regulatory challenges — around security, data governance and market concentration

In essence, this isn’t just a merger — it’s the formation of a vertically integrated technology empire spanning orbit, connectivity and artificial intelligence.

FAQs

Q1. What is the deal?

SpaceX has merged with xAI in an all-stock transaction creating a combined company valued at about $1.25 trillion.

Q2. How are xAI shareholders compensated?

They receive 0.1433 SpaceX shares for each xAI share, with some executives offered a cash alternative.

Q3. Why is this merger significant?

It creates one of the largest private technology companies ever and integrates AI with global satellite infrastructure.

Q4. What is the strategic goal?

To merge artificial intelligence capabilities with SpaceX’s launch systems and Starlink network for large-scale computing and connectivity.

Q5. Will regulators review the deal?

Almost certainly, due to SpaceX’s extensive government and defense contracts.