NEW YORK (Reuters) — Elon Musk’s SpaceX and xAI are in discussions to merge forward of a blockbuster public providing deliberate for later this yr. The mix would deliver Musk’s rockets, Starlink satellites, the X social media platform and Grok AI chatbot below one roof, in line with an individual briefed on the matter and two latest firm filings seen by Reuters.
The plan, which Reuters is reporting solely, would give recent momentum to SpaceX’s effort to launch knowledge facilities into orbit as Musk battles for supremacy within the quickly escalating AI race in opposition to tech giants like Google, Meta and OpenAI.
Musk, the world’s richest man, is the CEO of each the non-public area firm SpaceX and the synthetic intelligence firm xAI, which controls his social media platform X. He additionally runs electrical automaker Tesla, tunnel firm The Boring Co. and neurotechnology firm Neuralink.
Musk, SpaceX, and xAI didn’t reply to requests for remark.
Underneath the proposed merger, shares of xAI can be exchanged for shares in SpaceX. Two entities have been arrange in Nevada to facilitate the transaction, the individual mentioned.
Reuters couldn’t decide the worth of the deal, its major rationale, or its potential timing.
Company filings in Nevada present that these entities had been arrange on January 21. Certainly one of them, a restricted legal responsibility firm, lists SpaceX and Bret Johnsen, the corporate’s chief monetary officer, as managing members, whereas the opposite lists Johnsen as the corporate’s solely officer, the filings present.
The filings don’t comprise extra details about the aim of the businesses or their function in any deal.
Johnsen didn’t reply to a Reuters request for remark.
The individual, who requested anonymity as a result of the discussions are confidential, mentioned that some xAI executives may very well be given the choice to obtain money as a substitute of SpaceX inventory as a part of the deal. A last settlement, nevertheless, hasn’t been signed, and the timing and construction of the transaction stay fluid, the individual cautioned. SpaceX is already the world’s Most worthy privately held firm, final valued at $800 billion in a latest insider share sale. xAI was valued at $230 billion in November, in line with the Wall Road Journal. Reuters and different media have reported that SpaceX plans to go public a while this yr, with a valuation anticipated above $1 trillion.
GABRIEL V. CARDENAS by way of Getty Pictures
DATA CENTERS IN SPACE
By means of xAI, Musk is constructing out an enormous supercomputer for AI coaching in Memphis, Tennessee, known as Colossus. Final yr, SpaceX agreed to take a position $2 billion in xAI as a part of the startup’s $5 billion fairness fundraising, the Wall Road Journal reported on the time.
Talking in Davos, Switzerland, final week, the billionaire entrepreneur mentioned “the bottom value place to place AI will likely be in area. And that will likely be true inside two years, perhaps three on the newest.” Area-based AI processing, powered by photo voltaic power, is aimed toward reducing the price of producing the computing energy that runs and trains AI fashions similar to xAI’s Grok. Jeff Bezos’ Blue Origin introduced a brand new high-capacity spine community of 1000’s of satellites, whereas Google is researching space-based knowledge facilities with its Mission Suncatcher.
Constructing knowledge facilities in area stays a dangerous proposition, particularly with AI funding evolving so quickly and sometimes unpredictably. Analysts and a few business executives have questioned whether or not the envisioned cuts in power consumption are well worth the added prices of tailoring these programs for area.
Folding xAI into SpaceX might enhance the corporate’s footing for main protection contracts on the Pentagon, which has sought to ramp up AI adoption in its army networks, mentioned Caleb Henry of area analysis and advisory agency Quilty Analytics.
U.S. Protection Secretary Pete Hegseth earlier this month visited SpaceX’s Starbase improvement web site in Texas, the place he mentioned xAI’s language mannequin and its chat platform Grok will likely be built-in into army networks as a part of the Pentagon’s “AI acceleration technique,” aimed toward rushing up the army’s decision-making and planning.
xAI has a contract value as a lot as $200 million to supply Grok merchandise to the Pentagon.
Starlink and its nationwide safety variant Starshield already rely closely on synthetic intelligence, similar to for automated satellite tv for pc maneuvers in orbit. Starshield, below a contract with a U.S. intelligence company, is constructing a community of tons of of labeled satellites geared up with completely different sensors which can be anticipated to make use of AI to assist observe shifting targets on Earth.
LATEST MERGER BETWEEN MUSK COMPANIES
The deal wouldn’t be Musk’s first effort to mix companies he controls. In 2025, he folded social media platform X into xAI in a share swap that gave the artificial-intelligence startup entry to the platform’s knowledge and distribution. Earlier than that in 2016, he used Tesla inventory to purchase his solar-energy firm SolarCity. Earlier this month, xAI raised $20 billion in an upsized Sequence E funding spherical, exceeding its $15 billion goal at a valuation of $230 billion. Tesla, Musk’s electrical automotive firm, on Wednesday mentioned it agreed to take a position about $2 billion in xAI.
Based in 2002, SpaceX disrupted the worldwide area business with its reusable Falcon rockets, which proved very important to the swift launch of Starlink, a satellite tv for pc broadband community now consisting of 1000’s of satellites in area.
SpaceX has lined up banks for an IPO that would come as early as this yr. (Reporting by Echo Wang and Joey Roulette; Extra reporting by Milanna Vinn, Sabrina Valle and David Denims; Enhancing by Joe Brock, Daybreak Kopecki and Michael Learmonth)
