SpaceX has officially acquired xAI, merging two of Elon Musk's most ambitious private companies. This operation now links space launch services to the development of artificial intelligence, in a context where the need for computing power is exploding. Musk justifies this initiative by the need to overcome the limits of terrestrial infrastructure. This merger now raises questions about its cost, strategy and long-term relevance for both entities.
In brief
- SpaceX is buying xAI as the growing need for computing power for AI pushes the limits of terrestrial data centers.
- xAI's spending, estimated at $1 billion per month, illustrates the financial pressure driving consolidation among Elon Musk's companies.
- Starlink revenue could help fund AI expansion while reducing reliance on external capital markets.
- Spatial computing remains speculative for now, with timetables and technical details still unclear.
A response to terrestrial energy limits
Founded by Elon Musk, SpaceX has confirmed the acquisition of xAI, its artificial intelligence company designed to compete with industry leaders. Musk justifies this merger by AI's excessive dependence on terrestrial data centers, which are extremely demanding on electricity and cooling. According to him, this trajectory risks exerting unsustainable pressure on communities and the environment.
He believes that to ensure a sustainable rise in artificial intelligence, it will be necessary to rely on spatial solutions. He cites in particular solar radiation, much more powerful than the energy sources currently exploited, and affirms that a tiny fraction of this energy would be enough to cover all human needs. SpaceX could thus play a central role by placing computing centers in orbit, rather than extending energy-intensive infrastructures on the ground.
The terms of the agreement have not been disclosed, but its scale is remarkable. In September, xAI was valued at $200 billion after a fundraising round. For its part, SpaceX was preparing a stock sale in December valuing the company at nearly $800 billion.
The two companies are among the largest private companies in the world. Funding pressure appears to be the main driver of the merger: xAI burns around $1 billion a month to build and train its models.
Starlink in support of xAI
Unlike other more recent Musk projects, SpaceX has a solid track record. It is still the only American company to regularly transport astronauts to the International Space Station.
The company is also a key player in launches for NASA and the United States Department of Defense. Above all, its network of Starlink satellites, with more than 9,000 units in orbit, now generates more revenue than launches, and could help finance xAI's activities.
This operation could mark a turning point for the technology industry:
- The energy demand for AI continues to increase, pushing for a rethink of infrastructure.
- xAI's spending pace makes it difficult to grow independently without additional resources.
- Starlink becomes an internal financing lever for the development of AI models.
- SpaceX obtains a central role in putting future computing infrastructures into orbit.
However, the concrete benefits for SpaceX remain to be defined. Musk talked about creating data centers in space, but without giving a timeline or technical details. On Friday, SpaceX asked the Federal Communications Commission for permission to launch up to one million satellites under the project. It remains to be seen whether xAI's software will have a direct impact on SpaceX's core activities, such as launches or communications.
A strategic consolidation before the IPO?
Musk continues his consolidation strategy, as SpaceX eyes a giant IPO. According to Bloomberg Intelligence, xAI's financial profile could dampen the overall valuation. But a $200 million contract recently signed with the Department of Defense could reassure investors about the commercial viability of xAI.
On the management side, Gwynne Shotwell, president and chief operating officer of SpaceX, is expected to play a key role in overseeing this merged entity. Musk also continues to rely on Anthony Armstrong, former Morgan Stanley executive and current CFO of xAI – who also holds this position at X, the social platform acquired by Musk in 2022.
This type of reorganization is not new for Musk, who has merged xAI with
Moreover, discussions around a SpaceX–xAI merger were already underway, and an alliance with Tesla would also have been considered. SpaceX is preparing for an IPO that could value the company as much as $1.5 trillion.
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