Elon Musk announced that SpaceX has acquired his AI company, xAI, in a deal that brings together two of his most high-profile ventures and tightens the links between his work in space technology and AI development.
The deal is among the most far-reaching mergers seen in the tech industry. It pairs a major defense and aerospace contractor with a rapidly expanding AI business whose expenses are dominated by energy, chips, and data centers. The move could also strengthen SpaceX’s push into data infrastructure as Musk seeks to challenge established AI players such as Google, Meta, OpenAI, and Anthropic.
According to a source familiar with the deal, the agreement assigns a valuation of $1 trillion to SpaceX and $250 billion to xAI. Under the terms, xAI shareholders receive a fraction of SpaceX equity for each share they own. Some senior staff at xAI are expected to have the option to take cash instead, based on a set price per share.
In a statement, Musk described the acquisition in sweeping terms, calling it a new phase in the shared mission of the two companies and linking their combined efforts to his long-standing vision of expanding human understanding of the universe.
The acquisition sets a new benchmark for mergers and acquisitions worldwide. It surpasses the long-standing record set in 2000, when Vodafone completed its takeover of Germany’s Mannesmann in a deal worth more than $200 billion.
The combined entity is expected to price shares at just over $500 each. SpaceX was already the most valuable private company globally, with an estimated valuation of around $800 billion following a recent internal share sale. xAI, meanwhile, was valued late last year at about $230 billion.
The deal comes as SpaceX prepares for what could be one of the largest initial public offerings ever. Sources say the listing, expected later this year, could place the company’s market value above $1.5 trillion.
The deal further concentrates Musk’s sprawling business interests into a more closely linked system. Alongside SpaceX and xAI, that network includes electric carmaker Tesla, infrastructure venture the Boring Company, and brain-implant company Neuralink.
Musk has repeatedly combined his companies in the past. Last year, he integrated X (formerly Twitter) into xAI through a share exchange, giving the AI firm access to user data and a built-in audience. In 2016, Tesla acquired solar installer SolarCity, another Musk-backed venture.
The latest transaction is likely to attract attention from investors and regulators. Questions may arise around corporate governance, pricing, and potential conflicts tied to Musk’s leadership roles across multiple companies, as well as the sharing of personnel, contracts, and technology.
SpaceX’s extensive work with U.S. government agencies adds another layer of oversight. The company holds multibillion-dollar agreements with intelligence organizations, NASA, and the Pentagon, all of which have the authority to review major corporate changes for compliance and security concerns.
As the tech race continues to gain momentum, this latest big bucks acquisition could magnify attention on the tech leaders while other tech firms like D-Wave Quantum Inc. (NYSE: QBTS) accelerate their own quantum computing programs to grow their market capitalizations and attract more investment.
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