SpaceX Acquires AI Startup xAI to Develop Space-Based AI Data Centers

SpaceX has acquired the artificial intelligence start-up xAI in a move that consolidates two companies owned by Elon Musk. Musk stated that the acquisition will create ‘the most ambitious, vertically-integrated innovation engine on (and off) Earth,’ combining AI, rockets, satellite internet, mobile communications, and real-time information platforms. The merger aims to explore AI data centers in space, leveraging near-constant solar power to scale computing operations efficiently. xAI previously acquired X (formerly Twitter), which Musk bought in 2022 for $44 billion. The combined entity would have a valuation of $1.25 trillion, according to Bloomberg, and the deal comes ahead of SpaceX’s planned initial public offering later this year. Space-based AI development is being explored by other companies as well, including Google’s Project Suncatcher, which plans to integrate AI chips in solar-powered satellites. xAI is also investing $20 billion in a data center near the Tennessee-Mississippi border. The acquisition follows controversies surrounding X’s AI chatbot, Grok, which had been used to create sexualized images of real people. Following investigations and government pressure, X has restricted Grok from manipulating images of real individuals. This strategic acquisition reflects Musk’s ambition to merge space, AI, and communication technologies under one vertically integrated organization.