Musk is promoting the merger of his rocket manufacturer SpaceX and artificial intelligence startup xAI, and the combined entity will fully prepare for a large-scale initial public offering. Musk announced the deal in a blog post on Monday, saying he was building "the most ambitious vertically integrated innovation engine on Earth (and beyond)" that would cover artificial intelligence, rocketry, satellite-based internet and his X social media platform.
The combined company plans to price its shares in an initial public offering, valuing it at $1.25 trillion. The deal closed on February 2, with SpaceX listed as the "managing member" of X.AI Holdings, according to Nevada public records obtained.
The deal is the largest merger in Musk's vast business empire, bringing together two companies that have continued to rise in private market valuations. Space Exploration Technology launched a round of secondary stock trading last year, with a valuation of US$800 billion at the time; xAI completed a US$20 billion financing round at the beginning of this year, with a valuation of approximately US$230 billion.
Musk's electric carmaker Tesla, which is its main source of liquidity, announced last week that it had agreed to invest about $2 billion in xAI.
At the beginning of last year, Musk further expanded xAI's business territory by merging xAI with social platform X (formerly Twitter).
xAI is currently facing a number of new regulatory investigations, including relevant departments in Europe, India, Australia and California in the United States. Previously, it was reported that the company's Grok artificial intelligence tool allows users to easily generate and disseminate sexual images of children and private images of adults without the consent of the parties based only on photos circulated online, and the victims are mostly women.
Musk founded SpaceX in 2002. The company has become the world's leading orbital launch service provider by signing contracts with NASA and the Department of Defense. Space Exploration Technology also owns and operates the "Starlink" satellite Internet service, which currently has more than 9,000 satellites in orbit and has approximately 9 million users.
In 2023, Musk founded xAI Company to compete with the artificial intelligence company OpenAI. OpenAI launched the chatbot ChatGPT at the end of the previous year, which set off a boom in generative artificial intelligence. Musk was one of the co-founders of OpenAI in 2015, when the project was a non-profit artificial intelligence research laboratory. Musk left OpenAI in 2018 and is currently involved in a bitter legal dispute with the company and its CEO, Sam Altman.
SpaceX's revenue in 2025 will be between $15 billion and $16 billion, with profits of approximately $8 billion.
Meanwhile, xAI’s financial situation is more precarious. As a "cash-burning" company, xAI is fully committed to building costly infrastructure in order to keep up with OpenAI and Google - these two companies have laid out the field of artificial intelligence earlier and are in a leading position in developing the most popular artificial intelligence models in the market.
But Musk positioned the deal as an important part of a strategic plan for the future, with the ultimate goal of building data centers in space. SpaceX has recently submitted an application to the U.S. Federal Communications Commission, seeking to launch "up to 1 million" satellites to support its "Orbital Data Center" project.
Musk wrote: "My estimate is that in the next two to three years, the most cost-effective way to obtain artificial intelligence computing power will be born in space. This cost advantage alone will allow innovative companies to train artificial intelligence models and process data at an unprecedented speed and scale, thereby accelerating cognitive breakthroughs in the field of physics and technological inventions that benefit mankind."