Elon Musk’s SpaceX Acquires AI Start-Up xAI

The deal, first reported by Reuters, brings together a space and defense contractor with a fast-growing AI developer, whose operations are driven by chips, data centers, and energy. It could also support SpaceX’s data-center expansion as Musk competes with AI leaders including Alphabet, Meta, Amazon-backed Anthropic, and OpenAI.

The transaction reportedly values SpaceX at $1 trillion and xAI at $250 billion. Investors in xAI will receive 0.1433 SpaceX shares per xAI share, with some executives able to take cash at $75.46 per share instead of stock.

Read Also - Swedish AI Startup Berget AI Secures €2.1 M Funding

"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!" Musk said.

The deal may face scrutiny from regulators and investors over governance, valuation, and potential conflicts of interest, given Musk’s overlapping leadership roles. Questions may also arise regarding the transfer of engineers, proprietary technology, and contracts between the two companies.

The deal further consolidates Elon Musk’s sprawling business empire into a tighter, mutually reinforcing ecosystem dubbed by some investors and analysts as the “Muskonomy” which already includes Tesla, brain-chip maker Neuralink, and tunnel company The Boring Company.

Musk has a history of integrating his ventures: last year, he merged social media platform X into xAI via a share swap, giving the AI startup access to X’s data and distribution. In 2016, he used Tesla stock to acquire his solar-energy company, SolarCity.

SpaceX also holds billions in federal contracts with NASA, the Department of Defense, and intelligence agencies, all of which have oversight over mergers and acquisitions for national security and other risks.

Musk’s leadership across multiple companies means the agreement could face scrutiny from regulators and investors over governance, valuation conflicts of interest and the potential transfer of engineers, proprietary technology or contracts between entities.