SpaceX Evolves into AI Company: Absorbs xAI, Pursues $1.25 Trillion IPO
Elon Musk announced the merger of SpaceX and xAI. The rocket company absorbing an AI firm creates a $1.25 trillion giant. Musk revealed plans for orbital data centers, claiming 'space will become the cheapest way to generate AI compute.'
On February 2, 2026, Elon Musk announced the merger of SpaceX and xAI. The space company that builds rockets and satellite internet has absorbed an AI firm, creating the world's largest private company.
Why a Rocket Company Swallowed an AI Firm
Before the merger, SpaceX was valued at $800 billion and xAI at $230 billion. Combined: $1.25 trillion. That easily surpasses Saudi Aramco's IPO record of $25 billion.
Musk explained the merger rationale in his blog: 'Within 2-3 years, the lowest cost way to generate AI compute will be in space.' SpaceX has already asked the FCC for authorization to launch up to 1 million 'orbital data center' satellites. The plan is to bypass Earth's land and energy constraints to give xAI an overwhelming infrastructure advantage.
xAI Raised $20 Billion Just Before Merger
Just before the merger announcement in early January, xAI closed a $20 billion Series E round. Major investors included Nvidia, Cisco, Fidelity, and Qatar Investment Authority. Tesla also announced it would invest about $2 billion.
Founded in 2023, xAI gained attention with its chatbot Grok. Its integration with X (formerly Twitter) enabling real-time information access was a key differentiator. However, it has faced criticism for safety issues including deepfake controversies.
June IPO: Timed for Musk's Birthday?
The merged company's IPO is planned for June 2026. Some speculate it's timed for Musk's 55th birthday (June 28) and the alignment of Mercury, Venus, and Jupiter. Morgan Stanley, Goldman Sachs, JPMorgan, and Bank of America are mentioned as potential underwriters.
Musk has hinted at giving long-term Tesla shareholders priority allocation. Given his precedent of offering SpaceX shares to Tesla shareholders, this seems feasible.
Conclusion: AI Big 4, All Heading to Market
Alphabet (Google)-DeepMind, Anthropic, OpenAI, and xAI. These are commonly called the 'AI Big 4.' Alphabet is already public, while the other three are preparing for 2026 IPOs. With this merger bringing xAI to market through SpaceX, an era begins where all AI Big 4 will be traded on public markets.
