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Elon Musk’s SpaceX has acquired his AI group xAI, the billionaire said on Monday, in pursuit of his ambition to develop advanced AI tools powered by data centres in space.
SpaceX paid $250bn for the AI group, according to a person familiar with the matter, basing the price on a recent $20bn funding round that valued the two-year-old start-up at $230bn.
Musk did not disclose financial terms of the deal, but the two companies together are worth just over $1tn following recent funding rounds. The rocket company was recently valued at $800bn in a secondary stock sale.
SpaceX has been gearing up for an IPO, with Musk pushing to list the Starlink parent as early as June in a deal expected to raise as much as $50bn, which would make it the largest flotation of all time.
The merger, which complicates those plans, was part of Musk’s vision to develop “a sentient sun to understand the Universe and extend the light of consciousness to the stars!” he wrote in Monday’s announcement.
xAI and rivals, including Sam Altman’s OpenAI and Mark Zuckerberg’s Meta, have spent the past two years rushing to develop the costly data centres and chips needed to train and power their AI models.
Musk on Monday said “orbital data centres” would be essential to the future of the technology.
“Global electricity demand for AI simply cannot be met with terrestrial solutions, even in the near term, without imposing hardship on communities and the environment,” he wrote. “In the long term, space-based AI is obviously the only way to scale.”
SpaceX’s planned IPO would enable the company to fund the launch of large satellites acting to power xAI’s models. “In an age of AI maximalism, that’s worth trillions and trillions of dollars,” said one investor in both companies.
Bret Johnsen, SpaceX’s chief financial officer, was scheduled to hold a call with investors in the company on Monday afternoon to discuss the buyout, according to three people familiar with the matter.
The news is part of a broader consolidation of different wings of Musk’s empire under one corporate umbrella. Last March, xAI merged with Musk’s social media platform X.
The takeover valued the overall group at $113bn, pricing xAI at $80bn with X at $33bn. This tie-up allowed the companies to integrate more closely, with xAI training its models on X data while xAI’s Grok chatbot has been added to the social media platform’s social feeds. Musk bought X, formerly known as Twitter, for $44bn in October 2022.
xAI did not immediately respond to a request for comment.
Additional reporting by Ivan Levingston in London