SpaceX Acquires xAI in Bold Move to Take Artificial Intelligence Into Orbit

SpaceX Acquires xAI in Bold Move to Take Artificial Intelligence Into Orbit

Elon Musk says merger will create a trillion-dollar “vertically integrated innovation engine”

Elon Musk has announced that SpaceX has acquired artificial intelligence start-up xAI, bringing together two of his most ambitious companies in a move he says could redefine the future of AI, space technology and global communications.

The deal unites rocket launches, satellite networks and advanced artificial intelligence under one corporate umbrella, with Musk describing the merger as the foundation for a new era of space-based computing.

A merger designed to scale AI beyond Earth

According to Musk, combining SpaceX and xAI will allow both companies to pursue goals that would be difficult to achieve independently.

Key objectives of the combined business include:

• Building AI data centres in space, where energy and physical limitations on Earth are less restrictive
• Harnessing near-constant solar power, reducing reliance on costly and carbon-intensive terrestrial energy sources
• Integrating AI with satellite networks, enabling faster data processing and global connectivity

Musk described the merger as “the most ambitious, vertically integrated innovation engine on (and off) Earth”.

Why space-based AI is central to Musk’s vision

Musk has long argued that the future of artificial intelligence depends on access to vast computing power and energy resources. In his announcement, he said scaling AI on Earth alone would eventually hit physical and economic limits.

He pointed to several advantages of moving AI infrastructure into orbit:

• Space offers virtually unlimited room for expansion
• Solar energy is abundant and constant, reducing operating costs
• Fewer constraints on cooling and land use compared with Earth-based data centres

In Musk’s words, “It’s always sunny in space”, making it an ideal environment for energy-hungry AI systems.

A company valued at more than $1 trillion

Following the acquisition, the combined SpaceX–xAI group is estimated to be worth around $1.25 trillion, according to industry analysts. The deal comes as SpaceX prepares for a widely anticipated initial public offering, which is expected to be announced later this year.

The move also strengthens Musk’s wider technology empire, which already spans electric vehicles, satellite internet and social media.

Growing competition in space-based computing

SpaceX is not alone in exploring AI infrastructure beyond Earth. Other major technology firms are also investing in orbital computing concepts.

Recent developments include:

• A research project announced by Google focused on solar-powered AI satellites
• Plans by xAI to spend $20 billion on a major data centre in the southern United States, highlighting the growing demand for compute capacity

These initiatives underline how rapidly AI energy requirements are reshaping technology strategy.

Ongoing scrutiny over AI safety and regulation

The acquisition comes shortly after controversy surrounding xAI’s chatbot technology on social media platform X. Complaints that the tool was being misused to create inappropriate images triggered an investigation by the UK’s online safety regulator.

Following the backlash, the company introduced new restrictions preventing the AI from altering images of real people in a sexualised way, stating that the rules apply to all users, including paid subscribers.

UK officials have warned that technology platforms must comply fully and immediately with online safety laws.

What this deal means for the future of AI

By merging SpaceX and xAI, Musk is signalling a long-term strategy focused on scale, energy efficiency and global reach. If successful, space-based AI could fundamentally change how artificial intelligence is powered, deployed and regulated in the decades ahead.

The acquisition marks not just a new chapter for both companies, but a significant moment in the race to define the future of AI infrastructure.

Sources: (SKY.com, CNN.com)