NEW YORK (Reuters) — Elon Musk’s SpaceX and xAI are in discussions to merge forward of a blockbuster public providing deliberate for later this 12 months. The mix would carry Musk’s rockets, Starlink satellites, the X social media platform and Grok AI chatbot underneath 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 contemporary momentum to SpaceX’s effort to launch information facilities into orbit as Musk battles for supremacy within the quickly escalating AI race towards tech giants like Google, Meta and OpenAI.
Musk, the world’s richest man, is the CEO of each the non-public house 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 could be exchanged for shares in SpaceX. Two entities have been arrange in Nevada to facilitate the transaction, the particular person mentioned.
Reuters couldn’t decide the worth of the deal, its main rationale, or its potential timing.
Company filings in Nevada present that these entities had been arrange on January 21. Considered 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 further details about the aim of the businesses or their position in any deal.
Johnsen didn’t reply to a Reuters request for remark.
The particular person, 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 ultimate settlement, nonetheless, hasn’t been signed, and the timing and construction of the transaction stay fluid, the particular person cautioned. SpaceX is already the world’s most dear 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 Avenue Journal. Reuters and different media have reported that SpaceX plans to go public a while this 12 months, with a valuation anticipated above $1 trillion.
GABRIEL V. CARDENAS through Getty Photographs
DATA CENTERS IN SPACE
By way of xAI, Musk is constructing out an enormous supercomputer for AI coaching in Memphis, Tennessee, referred to as Colossus. Final 12 months, SpaceX agreed to speculate $2 billion in xAI as a part of the startup’s $5 billion fairness fundraising, the Wall Avenue Journal reported on the time.
Talking in Davos, Switzerland, final week, the billionaire entrepreneur mentioned “the bottom value place to place AI shall be in house. And that shall be true inside two years, possibly three on the newest.” Area-based AI processing, powered by photo voltaic vitality, is geared 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 information facilities with its Mission Suncatcher.
Constructing information facilities in house 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 vitality consumption are well worth the added prices of tailoring these methods for house.
Folding xAI into SpaceX might increase the corporate’s footing for main protection contracts on the Pentagon, which has sought to ramp up AI adoption in its navy networks, mentioned Caleb Henry of house analysis and advisory agency Quilty Analytics.
U.S. Protection Secretary Pete Hegseth earlier this month visited SpaceX’s Starbase growth website in Texas, the place he mentioned xAI’s language mannequin and its chat platform Grok shall be built-in into navy networks as a part of the Pentagon’s “AI acceleration technique,” geared toward dashing up the navy’s decision-making and planning.
xAI has a contract value as a lot as $200 million to offer 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, underneath a contract with a U.S. intelligence company, is constructing a community of a whole lot of labeled satellites geared up with totally different sensors which can be anticipated to make use of AI to assist monitor 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 information 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 Collection E funding spherical, exceeding its $15 billion goal at a valuation of $230 billion. Tesla, Musk’s electrical automobile firm, on Wednesday mentioned it agreed to speculate about $2 billion in xAI.
Based in 2002, SpaceX disrupted the worldwide house 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 house.
SpaceX has lined up banks for an IPO that would come as early as this 12 months. (Reporting by Echo Wang and Joey Roulette; Further reporting by Milanna Vinn, Sabrina Valle and David Denims; Enhancing by Joe Brock, Daybreak Kopecki and Michael Learmonth)
