Elon Musk combines firms SpaceX and xAI ahead of expected public offering later this year 

The deal gives SpaceX a valuation of $1tn, and xAI a value of $250bn, people familiar with the matter said.

The world’s richest man Elon Musk is combining his companies SpaceX and xAI in a deal that values the enlarged entity at $1.25 trillion (tn) (€1.06tn) ahead of an expected initial public offering (IPO) later this year.

The acquisition of xAI was announced in a statement on SpaceX’s website signed by Mr Musk.

The deal gives SpaceX a valuation of $1tn, and xAI a value of $250bn, people familiar with the matter said. The combined company’s valuation was announced to employees in a memo on Monday, some of the people said earlier.

In March 2025, Mr Musk merged his social media platform X, formerly Twitter, into xAI.

SpaceX said it acquired xAI to “form the most ambitious, vertically-integrated innovation engine on (and off) Earth, with AI, rockets, space-based internet, direct-to-mobile device communications and the world’s foremost real-time information and free speech platform.” SpaceX had been planning an IPO that could raise as much as $50bn, in what would be the biggest initial share sale to date.

The combined firm’s shares are expected to be worth $526.59 each, according to some of the people, who asked not to be identified as the information isn’t public. The deal is all stock, one of the people said.

Representatives for SpaceX and xAI didn’t immediately respond to requests for comment.

The deal brings together two of the largest closely held companies in the world. xAI raised funds at a $230bn valuation in January, while SpaceX was set to go ahead with a share sale in December at a valuation of about $800bn.

Terms of the offering including price and valuation weren’t disclosed in the statement on SpaceX’s website.

In explaining the rationale for the deal, Mr Musk said in the statement that the least expensive way to do AI computations within two to three years will be in space.

“This cost-efficiency alone will enable innovative companies to forge ahead in training their AI models and processing data at unprecedented speeds and scales, accelerating breakthroughs in our understanding of physics and invention of technologies to benefit humanity,” he wrote.

SpaceX is requesting permission to launch as many as a million satellites into the Earth’s orbit for the plan, according to a filing Friday.

xAI, which also operates chatbot Grok, is an expensive operation, burning around $1bn a month in service of its stated ambition to gain “a deeper understanding of our universe.” 

At the end of January, the European Commission launched an investigation into X over the production of sexually explicit images and the spreading of possible child sexual abuse material by the platform’s AI chatbot feature, Grok.

The formal inquiry also extends an investigation into X’s recommender systems, algorithms that help users discover new content.

A merger with SpaceX pools capital, talent, access to computing power — and blurs corporate boundaries.

Unlike some of Musk’s other ventures, SpaceX stands out as arguably his most successful and consistent business. The company, the only American one that can routinely send astronauts to and from the International Space Station, is a key rocket launch provider for both NASA and the US Department of Defense, which the White House has moved to rename the Department of War.

The increasing revenue it’s generating from the Starlink network of more than 9,000 satellites is even more significant, now outpacing launch sales and presenting a potential source of funding for xAI’s capital-intensive business.

Following the announcement of the acquisition, SpaceX also noted that one of its Falcon 9 rockets suffered an undisclosed issue after launching a batch of Starlink satellites into orbit. The company said that while the upper port of the rocket safely deployed all the satellites on board, a mishap occurred just before the vehicle was set to take itself out of orbit.

The incident marks a relatively rare misstep for the Falcon 9, which last suffered in an-flight issue in 2024. “Teams are reviewing data to determine root cause and corrective actions before returning to flight,” SpaceX said in a statement on X.

Bloomberg