Elon Musk Integrates xAI with SpaceX—Building the Most Valuable Private Company in the World.

Elon Musk’s aerospace and satellite firm SpaceX is set to acquire his AI company xAI, the billionaire revealed on Monday. In a blog entry, Musk explained that the acquisition is necessary as global electricity demands for AI cannot be satisfied with “terrestrial solutions,” and Silicon Valley will soon require data centers in space to fulfill its AI goals.

“In the long term, space-based AI is clearly the only way to scale,” Musk stated. “Thus, the only logical approach is to relocate these resource-intensive operations to a domain with ample power and space. After all, space is referred to as ‘space’ for a reason.”

This transaction, which unites two of Musk’s major private enterprises, values the combined entity at $1.25 trillion, making it the world’s most valuable private company, as reported by Bloomberg.

Prior to the announcement of the xAI acquisition, SpaceX was gearing up for a public offering later this year. According to Bloomberg, the space company’s IPO plans remain intact.

In December, SpaceX informed its employees that it intended to purchase insider shares in a move that would value the rocket company at $800 billion, as noted by The New York Times. Last month, xAI disclosed that it had secured $20 billion from investors, raising the company’s valuation to approximately $230 billion.

This marks another instance where Musk has aimed to consolidate segments of his extensive business empire, which primarily comprises privately-owned ventures like xAI, SpaceX, the brain interface firm Neuralink, and the tunnel transportation business the Boring Company.

Last year, xAI acquired Musk’s social network, X, previously known as Twitter, in a deal that valued the combined entity at over $110 billion. Since then, xAI’s flagship product, Grok, has been increasingly integrated into the social media platform. Grok is prominently featured in various X functionalities, and Musk has asserted that the app’s content-recommendation algorithm is powered by xAI’s technology.

A decade prior, Musk utilized shares in his electric vehicle company Tesla to purchase SolarCity, a renewable energy company previously managed by his cousin Lyndon Rive.

The xAI acquisition showcases Musk’s ability to leverage his extensive network of companies to advance his ambitious visions for the future. In the blog post, Elon Musk mentioned that SpaceX will promptly focus on launching satellites into space to facilitate AI development on Earth, but ultimately, the space-based data centers he envisions could sustain civilizations on other planets, like Mars.

“This signifies not just the next chapter, but the next book in SpaceX and xAI’s mission: scaling to create a sentient sun to comprehend the Universe and extend the light of consciousness to the stars,” Musk stated in the blog post.