Elon Musk just moved the AI race beyond Earth. SpaceX has formally acquired xAi, lifting the combined valuation to about $1.25 trillion. Musk framed the deal as a vertically integrated engine that unites rockets, satellites, AI, and X into one system.
The immediate objective is to shift power-hungry AI compute from land-based data centers into orbit. The longer-term bet is that space can support AI at a scale Earth cannot.
Today’s AI depends on massive terrestrial data centers that require vast electricity and cooling. Musk argues that global power grids cannot keep up without straining communities and infrastructure. Space, in contrast, offers near-constant solar energy and effectively limitless room to expand.
To make this practical, SpaceX has asked the FCC to authorize up to one million satellites that could function as orbital data centers. This aligns with the rollout of more powerful V3 Starlink satellites aboard Starship this year, which will deliver more than 20 times the capacity of current models.
Musk has said that hourly Starship launches carrying roughly 200 tons could eventually place millions of tons into orbit annually. He estimates that launching one million tons of AI satellites per year could add about 100 gigawatts of new compute capacity annually, with minimal ongoing operating costs.
On that basis, he predicts that within two to three years, space could become the lowest-cost place to generate AI compute. That cost edge would allow companies to train larger models and process data at unprecedented speed and scale.
Structurally, SpaceX acquired xAI outright, valuing SpaceX near $1 trillion and xAI around $230–$250 billion. xAI shareholders will receive SpaceX shares, with some able to take cash instead. The merger tightens the ecosystem around SpaceX, Starlink, xAI, and X, deepening technical and financial integration across Musk’s companies.
Separately, SpaceX generated roughly $8 billion in profit on $15–$16 billion in revenue in 2025, highlighting its financial strength as it pursues this next phase of expansion.
