Elon Musk Merges SpaceX & AI Company xAI

SpaceX and xAI Complete Merger, Forming World’s Most Valuable Private Company

February 8, 2026 – In a landmark deal reshaping the landscape of both artificial intelligence and space exploration, SpaceX has officially acquired Elon Musk’s xAI, creating a combined entity valued at $1.25 trillion. The merger, announced earlier this week, establishes the most valuable private company in history, according to multiple reports.

The transaction, structured as a share exchange, will convert each share of xAI into 0.1433 shares of SpaceX stock. Documents reviewed by CNBC indicate xAI shares were valued at $75.46 each, while SpaceX shares were trading at $526.59. The deal comes as SpaceX prepares for a potential initial public offering later this year, which could raise up to $50 billion at a valuation as high as $1.5 trillion, according to the Financial Times.

Musk outlined the primary motivation behind the merger in a blog post, stating the goal is to “better build orbital data centers.” He explained that current advances in AI are heavily reliant on large terrestrial data centers, which consume vast amounts of power and require extensive cooling systems. “Global electricity demand for AI simply cannot be met with terrestrial solutions, even in the near term, without imposing hardship on communities and the environment,” Musk wrote.

The combined company aims to create an “innovation engine” integrating AI, rockets, space-based internet, and media – including Musk’s social media platform, X, formerly known as Twitter. This consolidation of Musk’s diverse business interests signals a strategic move towards vertical integration and long-term technological synergy.

xAI, initially a segment of X, was independently incorporated in the spring of 2025 and quickly gained investor confidence, surpassing the valuation of its parent company. Its primary product, the Grok chatbot, has faced scrutiny over its AI image generation capabilities, prompting investigations from the European Commission and the UK’s Ofcom regarding concerns about the creation of sexualized images. XAI responded in January by implementing restrictions on Grok users’ image editing capabilities.

The merger values SpaceX at $1 trillion and xAI at $250 billion, a figure described as the largest merger in history. While the specific terms of the deal were not publicly disclosed, a source familiar with the transaction confirmed the valuation to the BBC.

Analysts suggest that Musk is positioning himself as a leader in two rapidly evolving and potentially transformative technologies: artificial intelligence and space exploration. Emma Wall, chief investment strategist at Hargreaves Lansdown, noted that the merger, being entirely private, hasn’t been subject to the same market scrutiny as publicly listed companies like Tesla.

“But what you’re seeing priced in at these valuations is a kind of multi-decade vision for the company to put… energy and energy generation into space, data centres into space,” Wall told BBC Radio 4’s Today programme.

The acquisition also addresses xAI’s substantial financial needs. Bloomberg News reported that xAI was burning through approximately $1 billion per month. SpaceX, meanwhile, generates a significant portion of its revenue – as much as 80%, according to Reuters – from launching its Starlink satellites.

The merger is expected to ensure a continuous revenue stream for SpaceX as it pursues the development of space-based data centers, requiring a constant launch of numerous satellites. Musk did not comment on whether the merger would affect SpaceX’s planned IPO in his public memo.