The deal further entwines Musk’s sprawling business empire and sets the stage for what could be the largest initial public offering in history when SpaceX goes public later this year. The Financial Times reports the June IPO could raise $50 billion, while valuations for the combined entity range from $1.25 trillion to $1.5 trillion.
‘The next book’ in space innovation
Writing on the SpaceX website, Musk described the merger as creating “the most ambitious, vertically-integrated innovation engine on (and off) Earth,” combining capabilities in artificial intelligence, rockets, space-based internet, direct-to-mobile communications, and what he called “the world’s foremost real-time information and free speech platform.”
Musk called the acquisition “not just the next chapter, but the next book” in the companies’ mission to “make a sentient sun.”
Solar-powered AI in orbit
Behind Musk’s characteristic science fiction rhetoric lies a concrete plan: using SpaceX’s rockets to launch solar-powered, satellite-based data centers to develop and operate future AI models.
“Global electricity demand for AI simply cannot be met with terrestrial solutions,” Musk wrote. “The only logical solution therefore is to transport these resource-intensive efforts to a location with vast power and space.”
The announcement comes as funding for the AI buildout embraced by big tech companies shows signs of strain. The merger allows the combined company to pool capital, computing resources, and talent to address these challenges.
Musk boldly claimed SpaceX would eventually launch one million satellites operating as data centers using its Starship rocket, achieving launch rates of one flight per hour carrying 200 tons of payload. That represents a massive leap from the roughly one launch every other day the company achieved in 2025.
A step toward interplanetary civilisation
The project advances Musk’s long-stated goal of building colonies on the Moon and Mars, representing “a first step towards becoming a Kardashev II-level civilisation,” he wrote, referencing a 1960s futurist concept of a civilization capable of harnessing all energy from its star.
“Musk announced during last week’s Tesla results that he would be pivoting the business away from electric vehicles to automation and artificial intelligence, and this will be true of his space travel ambitions too,” said Emma Wall, chief investment strategist at Hargreaves Lansdown. “There are technological synergies to be made across all his businesses.”
Wall added that “what will be key is the market’s view of the valuation.”
Financial details and market context
A January fundraising round valued xAI, which owns the X social network and the Grok chatbot, at $230 billion. SpaceX was estimated at around $800 billion late last year.
The announcement did not disclose specific financial terms or provide a timeline for initial satellite deployments.
Musk had previously opposed taking SpaceX public, citing his frustration with the scrutiny required of Tesla as a publicly traded company and arguing that market demands for returns conflicted with his Mars colonization goals. However, the company’s ambitious new priorities require significant investment.
Competition heats up
SpaceX dominates the space launch market with reusable rockets that have drastically reduced satellite deployment costs. The company owns Starlink, the world’s largest satellite constellation.
SpaceX is currently developing Starship, the biggest rocket in history, designed for future manned missions. Amazon founder Jeff Bezos is competing directly with his Blue Origin company’s New Glenn rocket.
The two billionaires are at odds over NASA’s Artemis programme for Moon missions, with the space agency indicating it may turn to other suppliers due to SpaceX delays – concerns that did not appear in Musk’s statement.
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