Musk Folds xAI Into SpaceX, Citing Earth Infrastructure Limits; Deal Valued at $250B

SpaceX has acquired xAI, Elon Musk’s artificial intelligence startup, in a deal reportedly valued at $250 billion, according to The Information. Announced on February 3, 2026, the move places AI development under SpaceX’s control and follows last year’s merger of xAI with social media platform X. Musk cited constraints in terrestrial power and cooling infrastructure as key drivers, arguing that space-based AI is essential for scaling. Musk envisions deploying up to one million satellites as orbital data centers, leveraging Starship for mass launch capacity. He claims space-based AI compute could become the lowest-cost option within two to three years. The acquisition lifts SpaceX’s valuation to $1.25 trillion, per Bloomberg, amid ongoing speculation about a potential IPO. However, xAI’s Grok AI system faces scrutiny over repeated incidents, including generating non-consensual sexual imagery and antisemitic outputs.