Elon Musk has merged SpaceX and xAI, and the combined company is valued at $1.25 trillion. The world’s richest man hopes this will advance his increasingly ambitious plans in the fields of artificial intelligence and space exploration.
SpaceX released a statement on its website announcing the acquisition of xAI, which was signed by Musk.
According to informed sources, this deal has valued SpaceX at $1 trillion and xAI at $250 billion. Previously, informed sources said that the valuation of the merged company was disclosed to employees in a memo on Monday.
SpaceX stated that the purpose of acquiring xAI is to “create the most ambitious, vertically integrated innovation engine on Earth (and beyond), covering artificial intelligence, rockets, space internet, direct communication with mobile devices, and the world’s leading real-time information and free speech platform.”
Insiders revealed that SpaceX still plans to conduct its initial public offering (IPO) later this year. SpaceX previously intended to raise up to 50 billion US dollars through the IPO, which would be the largest IPO to date.
According to some informed sources, the stock of the merged company is expected to be valued at $526.59 per share. As the information has not been made public, these sources requested anonymity. One of the informed sources said that the entire transaction would be paid in stocks.
Representatives from both SpaceX and xAI did not respond to requests for comment.
This deal combines the world’s two largest privately held companies. XAI completed a financing round in January with a valuation of $230 billion, while SpaceX was originally planning a stock offering in December with a valuation of approximately $800 billion.
The statement on SpaceX’s website did not disclose the terms of this issuance, including the price and valuation.
According to a person familiar with the matter, SpaceX is subject to international regulations that control the transportation and sharing of information and technology related to defense systems, while xAI is not bound by such regulations. Therefore, the two companies will operate independently.
According to another person familiar with the matter, xAI will exist as a wholly-owned subsidiary of SpaceX.
In a memo, SpaceX said that employees should be cautious when interacting with XAI staff because not all XAI employees have obtained the necessary qualifications to work in accordance with these regulations. Previously, Business Insider reported that SpaceX plans to separate its business operations.
In his statement, Musk explained the reason for the deal, saying that in the next two to three years, the most economical way to conduct artificial intelligence computing would be in space.
He wrote: “This cost-effectiveness alone can enable innovative companies to advance the training of AI models and data processing at an unprecedented speed and scale, thereby accelerating breakthroughs in our understanding of physics and the invention of technologies that benefit humanity.”
This issuance further complicates the business activities of Musk. The billionaire acquired the social media platform Twitter at the end of 2022, renamed it X, and then merged it with his artificial intelligence startup xAI for $33 billion.
XAI also operates the chatbot Grok, a costly business that incurs about 1 billion US dollars each month to achieve its set goal of “gaining a deeper understanding of our universe”.
The merger with SpaceX could pool funds, talent and computing power, and blur the boundaries of the companies.
