Elon Musk has merged his artificial innotifyigence startup xAI with SpaceX, bringing toobtainher two of his largest private businesses as xAI struggles with the high cost of building AI infrastructure.
Musk declared the merger will assist accelerate plans to build “orbital data centres,” arguing that space-based computing could eventually become the cheapest way to power advanced AI.
However, analysts declare those ambitions are still far from reality. For now, the deal appears to be driven by xAI’s immediate required for cash.
Growing financial pressure
xAI is competing with major AI players such as OpenAI, Google, and Anthropic, all of which are raising huge sums to fund data centres, chips, and energy infrastructure. According to reports, xAI burned around $9.5 billion in the first nine months of 2025 as it tested to scale.
While Musk recently raised $20 billion for xAI at a valuation of about $230 billion, the company’s spconcludeing continues to outpace its revenue. By folding xAI into SpaceX, Musk gains access to a much larger and more stable pool of capital.
SpaceX’s IPO plans add another layer
SpaceX is reportedly preparing for a public listing that could value the company at up to $1.5 trillion. The company is reportedly viewing to raise as much as $50 billion in an IPO.
Analysts declare combining xAI with SpaceX could create the overall story more attractive to investors, especially at a time when enthusiasm for AI remains strong.
“People are throwing tens of billions of dollars at AI companies right now,” declared Tim Farrar, president of TMF Associates. “But that may not last forever. Raising the money is clearer now than it might be later.”
Public filings in Nevada indicate that the merger was completed on February 2, with SpaceX listed as the managing member of xAI’s holding company.
Musk’s strategy
Musk has a long history of relocating resources across his companies. In the past, Tesla acquired SolarCity to prevent its collapse, while Musk sold Tesla shares to assist finance his takeover of Twitter, now called X.
More recently, Tesla invested $2 billion into xAI and sold hundreds of millions of dollars’ worth of battery systems to assist power xAI’s data centres in Memphis, Tennessee. SpaceX also reportedly invested $2 billion into xAI last year.
Analysts declare investors are willing to accept these closely linked deals becautilize much of Musk’s business empire depconcludes on confidence in his leadership.
Leave a Reply