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Elon Musk’s SpaceX acquires xAI, merging his two most ambitious companies

By CNN

Published February 2, 2026 6:33 pm

CNN

By Chris Isidore, CNN

(CNN) — SpaceX has acquired xAI, the company announced on Monday, merging two of Elon Musk’s most ambitious companies into the most valuable private company in the world.

“This marks not just the next chapter, but the next book in SpaceX and xAI’s mission,” Musk said in a statement on SpaceX’s website.

The merger could be seen as an indication of the cash xAI needs to compete in the fast-growing field of AI, as well as the technology’s importance in future of space exploration.

SpaceX was valued at $800 billion as of a secondary share sale in December 2025, and xAI was valued at $230 billion as of their most recent funding round in January, according to PitchBook, a research firm that tracks the valuation of private companies.

The move also shows the scramble tech giants like Musk’s companies are going through to secure more computing resources to power artificial intelligence advancements.

“Current advances in AI are dependent on large terrestrial data centers, which require immense amounts of power and cooling,” Musk wrote. “The only logical solution therefore is to transport these resource-intensive efforts to a location with vast power and space.”

AI data centers in space

SpaceX sought permission on Friday from the Federal Communication Commission to launch a constellation of 1 million satellites into orbit. The filing said the aim is to provide a network of solar-powered data centers to “accommodate the explosive growth of data demands driven by AI.”

Musk said he estimates that the “lowest cost way to generate AI compute will be in space” within two to three years.

Musk is the latest tech leader to call for more computing power in the age of AI. Nvidia CEO Jensen Huang told CNBC last year that next-generation AI models will require “100 times” more power than older models. AI is expected to spike data center power demand by 165% by 2030, according to Goldman Sachs.

And tech giants have been pouring billions into AI-related infrastructure to meet that demand. Microsoft last week reported it spent $37.5 billion in the last quarter of 2025 on capital expenditures like data centers, while Meta spent $22.14 billion.

At the same time, some US residents have reported seeing their electricity bills surge. A Bloomberg News analysis last year found that in areas near data centers, electricity costs rose as much as 267% compared to five years ago.

But higher electric bills isn’t the only concern about the technology.

Musk’s xAI also owns his social media platform X, whose chatbot Grok recently came under fire for producing sexual images of mainly women, many of them real people. The AI chatbot was also criticized last year for a series of violent and antisemitic posts, which the company apologized for and blamed on a systems update.

Investors are lining up to pour cash into AI anyway. In January, xAI announced it raised $20 billion dollars from investors, including from Fidelity Management & Research Company and the Qatar Investment Authority.

Crossover at Musk’s companies

There was already plenty of crossover between xAI and SpaceX well before the acquisition. Several employees worked at both companies, such as Christopher Stanley, a principal security engineer for SpaceX since 2018 who has been X’s senior director of security engineering since 2022.

But some people who have worked at xAI have publicly expressed concern that the two companies are set up for a culture clash.

“xAI prides itself on ‘move fast and break things,’ flat hierarchy, act first ask questions later. (It isn’t fully this, but tries to be) I have a hunch many xAI people will hit culture shock w/ SpaceX,” wrote Benjamin De Kraker, a former staffer on xAI’s human data team.

Musk confirmed in December he was planning an initial public offering for SpaceX, which was founded in 2002. That Wall Street debut, reportedly valued at about $1.5 trillion, could be one of the largest in history. And that was before the merger with xAI.

Both SpaceX and xAI have had no trouble raising money from investors eager to participate in their growth plans. But being publicly traded would increase the ability of the companies to raise capital.

That proposition that could add to Musk’s already staggering net worth. He’s worth $676 billion, according to Bloomberg’s real time Billionaire tracker, making him the richest person in the world. A combined SpaceX and xAI public could dramatically increase that net worth.

This story has been updated with additional context.

–CNN’s Clare Duffy, Lisa Eadicicco, Hadas Gold, Jackie Wattles and Matt Egan contributed to this report