SpaceX, xAI in Merger Talks Ahead of Potential IPO, Sources Say

SpaceX and xAI are in advanced discussions to merge ahead of a potential SpaceX IPO as early as June 2026, Reuters reported on January 29, 2026. The deal would consolidate Grok AI, X platform, Starlink, and rocket assets under one corporate entity. Two Nevada entities — K2 Merger Sub Inc. and K2 Merger Sub 2 LLC — were formed January 21, 2026, with SpaceX CFO Bret Johnsen listed as manager. Structure may involve stock swaps, though cash alternatives for xAI execs remain possible. No final agreement is signed; terms, valuation, and timing are fluid. The merger could enable AI data centers in orbit — a goal Elon Musk highlighted at Davos, calling space “the lowest-cost location for AI deployment” within 2–3 years. Analysts note synergies for Pentagon contracts: xAI holds a $200M DoD deal for Grok, while Starlink’s defense variant, Starshield, already uses AI for satellite operations. SpaceX, valued at $800B in secondary markets, remains the most valuable U.S. private company.