Elon Musk announced Monday that SpaceX has acquired his AI startup xAI in a record-setting deal, merging the rocket and satellite powerhouse with the creator of the Grok chatbot to align his AI and space ambitions.
The deal ranks among the most audacious technology mergers to date, pairing a space and defense contractor with a rapidly expanding AI developer whose expenses are dominated by chips, data centers, and energy. It could also strengthen SpaceX’s data-center strategy as Musk positions the company against rivals such as Google, Meta, Anthropic, and OpenAI in the race for AI dominance.
SpaceX is valued at $1 trillion in the transaction, while xAI is pegged at $250 billion, according to a person familiar with the deal. Under the terms, xAI investors will receive 0.1433 shares of SpaceX for each xAI share they hold. Some xAI executives may also choose a cash payout in lieu of stock, priced at $75.46 per share, the person said.
“This marks not just the next chapter, but the next book in SpaceX and xAI’s mission: scaling to make a sentient sun to understand the Universe and extend the light of consciousness to the stars!” Musk said.
The xAI acquisition marks the world’s largest M&A deal on record, surpassing Vodafone’s $203 billion takeover of Mannesmann in 2000, according to LSEG. The combined SpaceX–xAI entity is expected to price shares at around $527, sources said. SpaceX, already the world’s most valuable private company, was last valued at $800 billion, while xAI was valued at $230 billion in November. The deal comes as SpaceX prepares for a blockbuster IPO that could value the company at more than $1.5 trillion.
The deal further consolidates Musk’s far-flung business empire and fortunes into a tighter, mutually reinforcing ecosystem – what some investors and analysts informally call the “Muskonomy” – which already includes Tesla, brain-chip maker Neuralink and tunnel firm the Boring Company.
The world’s richest man has a history of merging his ventures together. Musk folded social media platform X into xAI through a share swap last year, giving the AI startup access to the platform’s data and distribution. In 2016, he used Tesla’s stock to buy his solar-energy company SolarCity.
The deal might attract attention from regulators and investors due to concerns about governance, valuation, and conflicts of interest, considering Musk's leadership roles in various companies. Additionally, the potential transfer of engineers, proprietary technology, and contracts between entities could be scrutinized. SpaceX, which has billions in federal contracts with NASA, the Department of Defense, and intelligence agencies, is subject to review of mergers and acquisitions for national security and other risks.