Elon Musk is bringing xAI to SpaceX — creating the world’s most valuable private company

Elon Musk’s rocket The billionaire announced on Monday that satellite company SpaceX is acquiring his artificial intelligence startup xAI. In a blog post, Musk said the acquisition was justified because the global demand for electricity for AI cannot be met by “terrestrial solutions,” and Silicon Valley will soon need to build data centers in space to support its AI ambitions.

“In the long term, it is clear that AI in space is the only way to scale,” Musk wrote. “So the only logical solution is to move these resource-intensive efforts to a location that has enormous power and space. I mean, space is called ‘space’ for a reason.”

The deal, which brings together two of Musk’s largest private ventures, values ​​the combined entity at $1.25 trillion, making it the world’s most valuable private company, according to a report by Bloomberg.

SpaceX was preparing to go public later this year before announcing the xAI acquisition. The space company’s plans for an initial public offering are still ongoing, according to Bloomberg.

In December, SpaceX told employees it would buy internal stock in a deal that would value the rocket company at $800 billion, according to the New York Times. Last month, xAI announced that it had raised $20 billion from investors, raising the company’s valuation to nearly $230 billion.

This is not the first time Musk has sought to consolidate parts of his vast business empire, which is largely privately owned and includes xAI, SpaceX, brain interface company Neuralink, and tunnel transportation company The Boring Company.

Last year, xAI acquired Musk’s social media platform, X, formerly known as Twitter, in a deal that valued the combined entity at more than $110 billion. Since then, xAI’s core product, Grok, has become more integrated into the social media platform. Grok features prominently in several X features, and Musk has claimed that the app’s content recommendation algorithm is powered by xAI technology.

A decade ago, Musk also used shares of his electric car company Tesla to buy SolarCity, a renewable energy company run at the time by his cousin Lyndon Reeve.

The xAI acquisition demonstrates how Musk can use his vast network of companies to help advance his often grandiose future vision. Elon Musk said in a blog post that SpaceX will immediately focus on launching satellites into space to support the development of artificial intelligence on Earth, but eventually, the space-based data centers he envisions building could support civilizations on other planets, such as Mars.

“This represents not only the next chapter, but the next book in the SpaceX and xAI mission: expanding to create a conscious sun to understand the universe and extending the light of consciousness to the stars,” Musk said in a blog post.