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SpaceX has acquired artificial intelligence (AI) company xAI, marking consolidation within South African-born Elon Musk’s technology empire and signalling a deeper integration of AI capabilities into the aerospace and satellite business.
Announced on 2 February, the deal reportedly values the combined group at about $1.25 trillion, with SpaceX estimated at $1 trillion and xAI at $250 billion, positioning it among the largest corporate mergers on record.
The acquisition unites SpaceX’s rocket and satellite infrastructure with xAI’s AI capabilities, including its Grok chatbot and broader data processing platforms.
Beyond corporate consolidation, the merger is intended to accelerate the build-out of large-scale computing infrastructure, including plans for space-based data centres that could ease the energy and cooling limitations of Earth-bound AI systems.
Musk, who is the world’s richest man, has argued that the future of advanced AI computing could increasingly shift into space, where solar energy and physical scale offer long-term cost advantages.
The transaction comes as SpaceX edges closer to a potential initial public offering and sharpens competition with global AI leaders, such as Google, Meta, Amazon-backed Anthropic and OpenAI.
Beyond terrestrial solutions
Says Musk in a statement: “SpaceX has acquired xAI to form the most ambitious, vertically-integrated innovation engine on (and off) Earth, with AI, rockets, space-based internet, direct-to-mobile device communications and the world’s foremost real-time information and free speech platform.
“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.”
He notes that current advances in AI are dependent on large terrestrial data centres, which require immense amounts of power and cooling.
“Global electricity demand for AI simply cannot be met with terrestrial solutions, even in the near-term, without imposing hardship on communities and the environment. In the long-term, space-based AI is obviously the only way to scale. To harness even a millionth of our Sun’s energy would require over a million times more energy than our civilisation currently uses.
“The only logical solution, therefore, is to transport these resource-intensive efforts to a location with vast power and space. I mean, space is called ‘space’ for a reason.”
Musk explains that by directly harnessing near-constant solar power with little operating or maintenance costs, these satellites will transform our ability to scale compute.
“It’s always sunny in space! Launching a constellation of a million satellites that operate as orbital data centres is a first step towards becoming a Kardashev II-level civilisation, one that can harness the Sun’s full power, while supporting AI-driven applications for billions of people today and ensuring humanity’s multi-planetary future.”
He points out that in the history of space flight, there has never been a vehicle capable of launching the megatons of mass that space-based data centres or permanent bases on the Moon and cities on Mars require.
Forcing function
Even in 2025, the most prolific year in history in terms of the number of orbital launches, only about 3 000 tonnes of payload was launched into orbit, primarily consisting of Starlink satellites carried by SpaceX’s Falcon rocket, Musk states.
“The requirement to launch thousands of satellites to orbit became a forcing function for the Falcon programme, driving recursive improvements to reach the unprecedented flight rates necessary to make space-based internet a reality.
“This year, Starship will begin delivering the much more powerful V3 Starlink satellites to orbit, with each launch adding more than 20 times the capacity to the constellation as the current Falcon launches of the V2 Starlink satellites. Starship will also launch the next generation of direct-to-mobile satellites, which will deliver full cellular coverage everywhere on Earth.
“While the need to launch these satellites will act as a similar forcing function to drive Starship improvements and launch rates, the sheer number of satellites that will be needed for space-based data centres will push Starship to even greater heights. With launches every hour carrying 2 000 tonnes per flight, Starship will deliver millions of tons to orbit and beyond per year, enabling an exciting future where humanity is out exploring amongst the stars.”
According to Musk, the basic math is that launching a million tonnes per year of satellites generating 100kW of compute power per tonne would add 100 gigawatts of AI compute capacity annually, with no ongoing operational or maintenance needs. Ultimately, he says, there is a path to launching 1TW/year from Earth.
“My estimate is that within two to three years, the lowest cost way to generate AI compute 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.”
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