SpaceX acquires xAI and plans IPO

Elon Musk's rocket company SpaceX has acquired another Musk company, xAI. xAI also includes X (formerly Twitter)

“SpaceX has acquired xAI to form the most ambitious, vertically-integrated innovation engine on (and off) Earth, with A.I., rockets, space-based internet, direct-to-mobile device communications and the world’s foremost real-time information and free speech platform,” Mr. Musk wrote in a memo addressed to some of his employees and obtained by The New York Times.

Building data centers in space was a primary driver for the transaction, he added.

Wait, what?

I wanted to look into that, because I didn't know it was in the works. I found this interview (below), where Musk talks about solar-powered AI datacenter satellites could be a compelling solution, because cooling and solar-power is more effective without the atmosphere blocking some of the radiation (heat transfer radiation, not nuclear radiation). Also, it's always sunny in space.

Experts remain skeptical, pointing to unresolved physical and engineering constraints that make the idea far from proven.

Last year, Musk folded X into xAI to centralize data, compute, and talent under one roof. Now he’s going further, pulling the volatile A.I. bet directly into SpaceX — the most operationally dominant private space company ever built.

The combined company is reportedly valued at $1.25T

(I am disgusted by the idea of trillion dollar private companies. Fuck that.)

So are they going public? While a public offering would probably occur this year, “whether it actually happens, when it happens and at what valuation are still highly uncertain,” the unsigned email said. “But the thinking is that if we execute brilliantly and the markets cooperate, a public offering could raise a significant amount of capital.”

The merger also concentrates real financial risk. xAI has been aggressively burning cash to build out data centers, while generating minimal revenue from Grok subscribers willing to pay for premium access.

SpaceX, by contrast, is a cash-generating machine by aerospace standards. It holds lucrative government contracts and has raised billions from investors like Founders Fund and Alphabet. That said, SpaceX is no stranger to heavy burn either, pouring capital into reusable rockets, Starship, and its satellite network.

Interesting times for sure.