In a significant move that consolidates Elon Musk’s expansive business interests, SpaceX has officially merged with his artificial intelligence venture, xAI. Announced on 2 February 2026, this merger is poised to enhance SpaceX’s capabilities as it prepares for a public offering later this year, with a projected valuation exceeding £1 trillion.
Ambitious Integration of Technologies
The merger, detailed in a statement posted on SpaceX’s website, aims to establish “the most ambitious, vertically-integrated innovation engine on (and off) Earth.” This initiative intends to combine advancements in artificial intelligence, aerospace technology, and satellite communications, creating a robust platform for real-time information exchange and free speech.
As part of this acquisition, SpaceX will integrate xAI’s assets, including the Grok chatbot and the social media platform X. This move aligns with Musk’s vision to deploy space-based data centres and solar-powered satellites, specifically designed to support the burgeoning demands of artificial intelligence technology.
Addressing Power and Cooling Challenges
The official announcement highlighted a pressing issue: the energy requirements of current AI models are heavily reliant on terrestrial data centres, which consume vast amounts of power and require extensive cooling systems. The statement argued that “global electricity demand for AI simply cannot be met with terrestrial solutions,” emphasising that the future of AI scalability lies in space-based infrastructures.
Musk’s strategy reflects a growing urgency to develop sustainable solutions that mitigate the environmental impact of AI, particularly as global concerns over energy consumption intensify.
Recent Developments and Market Valuations
In recent months, Musk has taken steps to interlink his businesses through various acquisitions and investments. Notably, xAI acquired the platform X in an all-stock deal in early 2025, while Tesla announced a planned investment of £2 billion in xAI just last month. Both companies have enjoyed substantial valuations amid ongoing momentum in the AI sector. SpaceX currently holds a remarkable estimated value of £800 billion, bolstered by its dominance in satellite launches and extensive contracts with the US government. Meanwhile, xAI recently completed a £20 billion Series E funding round, placing its valuation at approximately £230 billion.
However, xAI has faced criticism, particularly concerning its Grok AI tool, which has been accused of promoting harmful ideologies and disseminating non-consensual deepfake imagery. Despite this backlash, the company has managed to secure significant financial backing, highlighting the volatility and rapid evolution of the AI landscape.
Musk’s Resilience Amid Controversy
Speculation surrounding the merger has circulated in recent days, with Musk offering a cryptic endorsement on social media by simply replying “yes” to a post referencing the potential acquisition. This announcement comes at a pivotal time for Musk, following Tesla’s recent earnings report revealing disappointing revenue figures and ongoing challenges within its automotive division. Additionally, recent reports linking Musk to controversial figures have emerged, which he has dismissed as distractions aimed at tarnishing his reputation.
Why it Matters
The merger between SpaceX and xAI represents a bold leap towards integrating advanced technologies that could redefine the future of both aerospace and artificial intelligence. As the world faces mounting challenges related to energy consumption and environmental sustainability, Musk’s vision of utilising space for technological advancement could pave the way for innovative solutions. This convergence of aerospace and AI not only signifies a strategic business manoeuvre but also reflects broader trends in the tech industry towards greater integration and sustainability. The outcome of this merger will be closely watched, with implications likely to resonate across multiple sectors in the coming years.
