Elon Musk's SpaceX and xAI to join forces in $1.25trn deal

(Sharecast News) - Elon Musk is merging rocket business SpaceX with his artificial intelligence firm xAI, creating the world's largest private company valued at well over $1trn.

In a statement released late on Monday, Musk said the tie-up would create "the most ambitious, vertically-integrated innovation engine on (and off) earth", with a focus on building orbital data centres in space.

"This marks not just the next chapter, but the next book in SpaceX's and xAI's mission: scaling to make a sentient sun to understand the universe and extend the light of consciousness to the stars!"

The deal will bring together SpaceX's rockets and Starlink satellites and xAI's social media platform X and the Grok AI chatbot.

Financial terms were not disclosed. However, according to multiple reports - including Reuters and the Financial Times - SpaceX is understood to be paying $250bn for xAI, which Musk set up just two years ago, giving the combined business a valuation of $1.25trn.

Musk, the world's richest man, has been looking to streamline his tech empire ahead of possible flotation of SpaceX in the summer. Musk also runs electric vehicle maker Tesla Motors, Neuralink and The Boring Co.

The merged company will to work towards building orbital data centres in space, Musk said.

"Current advances in AI are dependent on large terrestrial data centres, which require immense amounts of power and cooling," he argued. "Global electricity demand for AI simply cannot be met with terrestrial solutions, even in the near term.

"The only logical solution therefore is to transport these resource-intensive efforts to a location with vast power and space. I mean, space is called space for a reason."

He concluded: "My estimate is that within two to three years, the lowest cost way to generate AI compute will be in space."