United States: Elon Musk’s SpaceX has confirmed it is acquiring xAI, the billionaire’s artificial intelligence start-up behind the Grok chatbot, in a move that further consolidates Musk’s sprawling business interests.
In a memo posted on SpaceX’s website, Musk said the merger would create a powerful ‘innovation engine’ combining artificial intelligence, rockets, space-based internet and media within a single organisation. Financial terms were not disclosed, but a source familiar with the transaction said xAI was valued at around $125 billion (£91 billion), while SpaceX was valued at $1 trillion, a level that would make it the most valuable private company in the world.
The announcement follows Tesla’s disclosure last month that it had invested $2 billion in xAI. At the time, Musk told Tesla investors that he envisioned xAI acting as an ‘orchestra conductor’ for Tesla’s factories, which he says will increasingly rely on autonomous robots. Musk has also said Tesla will halt production of two vehicle models as it pivots more aggressively toward robotics, one of the company’s most significant strategic shifts to date.
Tesla’s investment in xAI went ahead despite resistance from some shareholders, with abstentions and votes against the proposal outnumbering those in favour during a vote last year. SpaceX is widely reported to be preparing for a potential public listing, and analysts say the xAI deal fits that narrative. Emily Zheng, a senior analyst at PitchBook, said the acquisition bears the hallmarks of a company gearing up for an initial public offering (IPO).
In his memo, Musk argued that space itself could solve the energy and scaling challenges facing AI companies. He said the immediate focus would be on launching AI-focused satellites, while longer-term ambitions include space-based data centres.
Musk remarked that, “The capabilities we unlock by making space-based data centres a reality will fund and enable self-growing bases on the Moon, an entire civilisation on Mars, and ultimately expansion to the Universe.”
With the xAI deal, Neuralink and The Boring Company now appear to be the only Musk ventures not folded into one of his larger firms. xAI originated as a division of X, formerly Twitter, after Musk acquired the social media platform in 2022 and used its real-time data for AI training.
By early 2025, xAI had been spun off as an independent company and was valued more highly than X itself. The AI firm later acquired the social media platform in an all-stock deal, with Musk saying the merger would combine data, models, compute, distribution and talent.
xAI’s flagship product, Grok, has drawn regulatory scrutiny, particularly over its image-generation capabilities. In recent weeks, both the European Commission and UK media regulator Ofcom have launched investigations into X over concerns that Grok was used to generate sexualised images. In response, xAI said in January that it had imposed new restrictions limiting image-editing features for users.
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