Elon Musk said SpaceX acquired xAI, a deal that combines his powerful rocket-and-satellite business with his artificial-intelligence startup that is facing steep competition.
SpaceX confirmed the deal Monday, posting a memo Musk sent out about the arrangement on its website.
“SpaceX has acquired xAI to form the most ambitious, vertically-integrated innovation engine on (and off) Earth,” Musk, the top executive at both companies, said in the memo.
The combination brings together a mature and dominant company in SpaceX, with one that is in a nascent stage. SpaceX operates a fleet of reusable rockets, spacecraft that ferry astronauts to orbit, and Starlink, the world’s largest satellite fleet that provides broadband internet to millions of customers worldwide.
Musk’s xAI, like other AI companies, is training large-language models and runs Grok, a chatbot integrated into the X social-media platform. XAI is facing formidable competition from OpenAI, Anthropic, DeepMind and others.
SpaceX was one of xAI’s firs customers when it was getting off the ground back in 2024, The Wall Street Journal previously reported. In one of its first integrations, xAI was used to power customer-support features for SpaceX’s Starlink internet service.
The combined company is valued at $1.25 trillion, people familiar with the matter said. The merger valued xAI at around $250 billion, the people said. Bloomberg earlier reported on the valuations.
The merger revealed Monday is structured as a share exchange, where shares in xAI will be converted into 0.1433 shares of SpaceX stock. Employees will have the option to cash out and sell their xAI shares back to the company, the email said.
Musk controlled both private companies before their combination. He held a roughly 42% stake in SpaceX and 80% control over voting stock at the rocket maker.
The valuations in both companies have been steadily climbing in connection with secondary stock sales and efforts to raise fresh capital.
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