By Echo Wang and Joey Roulette
Feb 2 (Reuters) – Elon Musk said on Monday that SpaceX has acquired his artificial intelligence startup xAI, combining the rocket and satellite company with the maker of the Grok chatbot in a move aimed at combining Musk’s AI and space ambitions.
“This marks not only 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, first reported by Reuters last Thursday, represents one of the most ambitious tie-ups in the technology sector yet, linking a space and defense contractor with a fast-growing AI developer whose costs are largely driven by chips, data centers and energy. It could also boost SpaceX’s data center ambitions as Musk competes with rivals such as Google, Meta, Amazon-backed Anthropic and Alphabet’s OpenAI in the AI sector.
The combined company is expected to price the shares at about $527 each, giving it a valuation of $1.25 trillion, Bloomberg News reported earlier in the day.
Under the merger agreement, xAI will become a wholly owned subsidiary of SpaceX, said a source familiar with the matter, who requested anonymity.
The merger comes as the space company plans a successful public offering this year that could value it at more than $1.5 trillion, two people familiar with the matter said.
SpaceX, xAI and Musk did not immediately respond to requests for comment.
The deal further consolidates Musk’s business empire and fortunes into a tighter, mutually reinforcing ecosystem — what some investors and analysts informally call the “Muskonomy” — that already includes Tesla, brain-chip maker Neuralink and mining firm Boring Company.
The world’s richest man has a history of putting his ventures together. Musk spun off social media platform X at xAI through a stock exchange last year, giving the AI startup access to the platform’s data and distribution. In 2016, he used Tesla stock to buy his solar energy company SolarCity.
The deal could draw scrutiny from regulators and investors over governance, valuation and conflicts of interest because of Musk’s overlapping leadership roles at various firms, as well as the potential movement of engineers, proprietary technology and contracts between entities.
SpaceX also has billions of dollars in federal contracts with NASA, the Department of Defense and intelligence agencies, all of which have some authority to review M&A transactions for national security and other risks.
(Reporting by Echo Wang in New York, Joey Roulette in Washington and Juby Babu in Mexico City; Editing by Alan Barona, Dawn Kopecki and Matthew Lewis)