SpaceX Acquires xAI in $1.25 Trillion Merger, Musk Says AI’s Future Is in Space

SpaceX has completed its acquisition of artificial intelligence startup xAI, merging its rocket and satellite operations with the developer of the Grok chatbot to form a combined entity valued at $1.25 trillion, Elon Musk announced on February 2, 2026. The deal integrates two of the world’s largest private companies—SpaceX, previously valued near $800 billion, and xAI, valued at $230 billion in January 2026—and positions Musk to vertically integrate AI, space infrastructure, and real-time communication platforms. Musk stated the merger aims to create “the most ambitious vertically integrated innovation engine on and off Earth,” asserting that AI computation will achieve lowest costs in space within two to three years. xAI will operate as a wholly owned SpaceX subsidiary, though financial terms were not disclosed. SpaceX still plans an IPO later in 2026, potentially raising up to $50 billion. The transaction may face regulatory scrutiny due to SpaceX’s federal contracts with NASA and U.S. defense agencies, as well as governance concerns over Musk’s overlapping roles across Tesla (TSLA), Neuralink, and X.