Steve Kopack is a senior reporter at NBC News covering business and the economy.
SpaceX on Monday acquired xAI, the artificial intellgience startup that also owns the X social media platform, in a deal combining two companies owned by Elon Musk. Musk in a news release said that the combination would aim to pursue AI data centers in outer space.
The deal comes on the verge of SpaceX's highly-anticipated initial public offering, which is expected to occur later this year. The deal creates 'the most ambitious, vertically-integrated innovation engine on Earth, with AI, rockets, space-based internet, direct-to-mobile device communications and the world’s foremost real-time information and free speech platform,' Musk said in a statement. The combined company will become the world’s most valuable private company, worth more than $1.2 trillion, Bloomberg News reported. NBC News has not been able to verify the valuation, and the companies did not respond to requests for comment. Musk went on to say that space would be a crucial avenue for building advanced artificial intelligence. 'In the long term, space-based AI is obviously the only way to scale,' Musk wrote. 'The only logical solution therefore is to transport these resource-intensive efforts to a location with vast power and space.' Musk also offered an ambitious timeline for starting to develop AI from space. He's failed to meet many of the previous goals he set for his companies. “My estimate is that within 2 to 3 years, the lowest cost way to generate AI compute will be in space,” he wrote in Monday’s news release. SpaceX already conducts rocket tests using reusable parts, provides cellular phone and data services to T-Mobile customers and is working with NASA to return humans to the moon in the near future. Meanwhile, xAI, Musk's bid to get in on the AI boom, has reportedly soared to a more than $200 billion valuation. Along the way, the company and its AI bot, Grok, have drawn criticism. Recently, the company limited its image generation technology after users said it was creating sexualized deepfakes. A number of state attorneys general and the European Union are investigating the company. Musk's companies have often been intertwined but Monday's deal brings them even closer together. Another one of Musk's companies, Tesla, has invested in xAI and utilizes some of its technology. Musk merged his social media site X with xAI in early 2025, but the tie up between xAI and SpaceX marks the largest combination to date of Musk's vast business projects. Founded in 2002, SpaceX has helped catapult Musk to the ranking of richest person in the world, with a net worth of more than $670 billion. The company has quickly become a critical supplier of satellite-based internet around the world, with more than 9,000 satellites currently orbiting earth, used by both consumers and governments. SpaceX also holds multiple NASA contracts.
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