Elon Musk's SpaceX and xAI merge for orbital data center push

Elon Musk’s aerospace company SpaceX and artificial intelligence startup xAI are merging for a major push for establishing orbital data centers.

The announcement came in a blog post by Musk shared on Monday, February 2, 2026.

He wrote, “SpaceX has acquired xAI to form the most ambitious, vertically integrated innovation engine on (and off) Earth, with AI, rockets, space-based internet, and the X social media platform.”

The new company is anticipated to set its share price in an upcoming IPO that would value it at $1.25 trillion, as reported by Bloomberg.

The transaction marks the largest merger in Musk’s vast business portfolio, bringing together two companies that have seen their private market valuations skyrocket.

At the start of last year, Musk scaled xAI by merging it with his social media platform X (formerly Twitter).

xAI is facing regulatory investigations in key markets worldwide after its Grok AI tools enabled users to generate and share sexualized images of children and non-consensual intimate imagery, predominantly of adult women.

Elon Musk is pitching the deal as part of a strategic move to establish data centers in space.

For the unversed, SpaceX has recently asked the Federal Communications Commission for approval to launch up to 1 million satellites as part of its “orbital data centers.”

Musk added in the Monday post, “My estimate is that within 2 to 3 years, the lowest cost way to generate an AI computer will be in space.

This cost-efficiency alone will enable innovative companies to forge ahead in training their AI models and processing data at unprecedented speeds and scales, accelerating breakthroughs in our understanding of physics and invention of technologies to benefit humanity."

The merger spotlights the next chapter for SpaceX and xAI, and it's an entirely new mission: scaling the artificial intelligence to a cosmic level and spreading consciousness throughout the universe.