SpaceX Acquires xAI in $1.25T Deal to Build Space-Based Data Centers

SpaceX has acquired Elon Musk’s artificial intelligence startup xAI, forming a combined entity valued at $1.25 trillion, the company announced on February 2, 2026. The merger aims to develop space-based data centers to address terrestrial power and cooling constraints driven by AI’s soaring energy demands. Musk, CEO of both companies, stated in a memo that Earth-based infrastructure cannot sustainably meet AI’s electricity needs without harming communities and the environment—a reference to local backlash over xAI’s Memphis data centers. SpaceX, which derives up to 80% of its revenue from Starlink satellite launches, will now have a steady internal demand for satellite deployment. xAI is reportedly burning $1 billion monthly and previously acquired social media platform X, with Musk citing a $113 billion valuation for that combined entity. Tesla and SpaceX each invested $2 billion in xAI prior to the merger. An anticipated SpaceX IPO, possibly as early as June 2026, may be impacted, though Musk did not address it publicly.