Musk Merges xAI and SpaceX to Pursue Space-Based AI, Targeting $1.25T Valuation

SpaceX has acquired xAI in a strategic merger aimed at developing artificial intelligence infrastructure in space, Elon Musk announced on February 2, 2026. Musk cited unsustainable energy demands of terrestrial AI data centers as the primary driver, stating that space-based solutions are essential for long-term scalability. Musk argued that Earth-based power and cooling constraints cannot support AI’s growing electricity needs without harming communities or the environment. He emphasized the vast energy potential of the Sun, noting that even a millionth of its output would dwarf current global consumption. Bloomberg reports the combined entity could go public at a $1.25 trillion valuation, combining SpaceX’s $800 billion and xAI’s $230 billion recent valuations.