Elon Musk’s space firm SpaceX acquired his other AI startup xAI, creating the world’s most valuable private company.
The entrepreneur stated that the merger aims to establish data processing centres beyond Earth.
“Current advances in artificial intelligence rely on large terrestrial data centres, which require vast amounts of energy and cooling. The global demand for electricity simply cannot be met with Earth-based solutions without harming people and the environment,” he wrote.
According to Bloomberg News, the combined company is valued at $1.25 trillion. SpaceX plans an IPO in 2026. The deal valued SpaceX at $1 trillion and xAI at $250 billion.
The agency reports that both Musk’s companies face financial difficulties, although the space firm is in a better position.
SpaceX derives up to 80% of its revenue from launching Starlink satellites. In 2025, it earned a profit of $8 billion on revenue of $15-16 billion.
The AI startup spends about $1 billion a month. It has faced investigations worldwide after it allowed the generation and distribution of explicit content on X.
The billionaire noted that creating space data centres would require the constant launch of satellites, providing SpaceX with greater cash flow.
In February, the firm filed a request with the U.S. Federal Communications Commission to launch a group of 1 million satellites into orbit for data centres. The company presumably understands that the regulator will not approve such a large network and uses the inflated figure as a starting point for negotiations.
The project envisions a network of data centres in low Earth orbit, linked by laser channels. The document uses grand phrases like “the first step towards a Type II civilization on the Kardashev scale.”
“In my estimation, within two to three years, space will be the most economical way for AI computing. The price-performance ratio alone will allow innovative companies to advance in training neural networks and processing data at unprecedented speed and scale, accelerating breakthroughs in our understanding of physics and the invention of technologies for the benefit of humanity,” Musk wrote.
Space Exploration
Space is becoming an increasingly attractive location for data centres. Among the advantages are virtually unlimited access to the Sun and space for equipment. The downside is the high cost of rocket launches with the necessary infrastructure.
Analysts from the research group 33FG estimated that AI computing in orbit could become economically viable by 2030.
Google was one of the first to decide to explore space. The firm announced a plan to create a network of satellites in Earth orbit to harness solar energy and power data centres.
The proposed system will operate in a constantly sunlit zone of low Earth orbit, synchronized with the Sun. There, devices will be able to receive almost continuous sunlight exposure and maximize energy collection.
Google also took an interest in controlling nuclear fusion—developing relevant AI technology in collaboration with Commonwealth Fusion Systems.
The project aims to create agents that will control the plasma in the SPARC reactor and optimize its operation. The goal is to move closer to creating a virtually inexhaustible energy source.
In November, the corporation planned to increase AI capabilities 1,000-fold—doubling every six months over the next five years.
Back in March 2025, the startup xAI acquired X in a deal to purchase all shares. The first was valued at $80 billion, the second at $33 billion ($45 billion minus $12 billion in debt).