Acquisition brings Grok chatbot under rocket maker’s control as IPO speculation grows
SpaceX has acquired xAI, the artificial intelligence start-up founded by Elon Musk, in a move that deepens the billionaire’s efforts to centralise his commercial empire.
A memo from Musk published on the rocket company's website described the merger as an “innovation engine” combining AI, space technology, satellite internet and media.
Financial terms were not disclosed, but sources familiar with the transaction have been cited as saying it valued xAI at $125 billion and SpaceX at $1 trillion, making SpaceX the most valuable private company in history.
The deal follows a $2 billion investment in xAI by Tesla last month. At the time, Musk told shareholders he viewed the firm as a future “orchestra conductor” for Tesla’s robot-driven production lines. He also revealed that two vehicle models would be dropped to prioritise humanoid robots.
SpaceX has acquired xAI to form the most ambitious, vertically-integrated innovation engine on (and off) Earth, with AI, rockets, space-based internet, direct-to-mobile device communications and the world's foremost real-time information and free speech platform. This marks not just 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 - Elon Musk
Despite investor concerns about conflicts of interest, Tesla pressed ahead with the xAI investment, even as shareholder votes and abstentions showed more dissent than support.
Founded in 2023, xAI was initially developed within X, the social media company formerly known as Twitter, which Musk purchased in 2022. The start-up later became independent and was valued more highly than X itself before being reacquired in an all-stock deal.
xAI’s chatbot, Grok, has drawn regulatory scrutiny in the UK and European Union over its image generation features. The company said it introduced restrictions on user access in January.
The merger adds weight to speculation that SpaceX is preparing for an Initial Public Offering. Emily Zheng of PitchBook said consolidation “allows SpaceX to present a differentiated, capital-efficient growth narrative to public investors”.
In his memo, Musk suggested space infrastructure would be critical for AI, calling space-based data centres the “immediate focus” and a step towards “self-growing bases on the Moon” and beyond.