Musk, who is the CEO of both companies as well as publicly traded electric vehicle and robotics company Tesla, described the combination as one that will “form the most ambitious, vertically integrated innovation engine on (and off) Earth, with AI, rockets, space-based internet, direct-to-mobile-device communications, and the world’s foremost real-time information and free speech platform,” he wrote in a blog post on SpaceX’s website.

Musk cited the potential for space-based data centers, the energy-intensive computing facilities necessary to power AI services, as one of the most important benefits of the combination, even though the concept is still unproven and largely theoretical. “Global electricity demand for AI simply cannot be met with terrestrial solutions, even in the near term,” Musk wrote in the blog post.

“By directly harnessing near-constant solar power with little operating or maintenance costs, these satellites will transform our ability to scale compute,” Musk wrote.

While reports of a potential deal emerged last week, the stratospheric value of the transaction and the swiftness with which it closed left many industry observers in awe, underscoring the massive expectations around AI as well as fears of an overheated market that could be due for a reckoning.

According to reporting in Bloomberg, the deal between SpaceX and xAI will lead to a combined enterprise value of $1.25 trillion, with shares of xAI valued at $526.59 apiece. Musk has reportedly been hashing out the potential terms of a SpaceX IPO this year that would value the company at $800 billion, setting the stage for what could be the largest initial public offering of all time. 

Representatives from SpaceX and xAI did not immediately respond to requests for comment. 

Musk has a history of mixing his assets

Musk, the richest person in the world, has a documented history of mingling the financial interests of his businesses. In 2015, Tesla acquired Solar City, a solar energy company founded by Musk’s cousins and on whose board Musk served as chairman.

And in March 2025, xAI acquired X, the Musk-owned social platform formerly known as Twitter, in a $33 billion, all-stock deal. “xAI and X’s futures are intertwined,” Musk said at the time. 

More recently, Tesla surprised shareholders just last month when it revealed that it had invested $2 billion in xAI in exchange for a batch of preferred stock as part of xAI’s $20 billion Series E funding round. That investment means Tesla shareholders now own preferred stock in a company that has become a subsidiary of SpaceX, which could raise questions from investors about Tesla’s role in funding xAI’s growth. In addition to the $2 billion investment, Tesla disclosed it sold $430 million of Megapack battery storage and systems to xAI in 2025, costing it $285 million, exhibiting the circular nature of Musk’s businesses.

What about Grok?

Musk founded xAI in 2023, with the stated goal of creating an AI that he described as “truth seeking,” and with a “rebellious streak.” The company’s Grok chatbot has courted controversy ever since, recently getting blocked in some countries for producing sexualized deepfake images of women.

Musk did not mention Grok at all in Monday’s post announcing xAI’s merger with SpaceX, focusing instead on his vision of vastly expanding AI tech capabilities without the hindrance of limits imposed by Earth. “I mean, space is called ‘space’ for a reason,” wrote Musk, emphasizing his point with a cry-laughing emoji.

“This marks not just the next chapter, but the next book in SpaceX and xAI’s mission: scaling to make a sentient sun to understand the Universe and extend the light of consciousness to the stars!” Musk wrote.

Musk said his estimate over the next two to three years is that the cheapest way to generate AI compute will be in space and that “innovative companies” will quickly accelerate their breakthroughs. 

“The capabilities we unlock by making space-based data centers a reality will fund and enable self-growing bases on the Moon, an entire civilization on Mars, and ultimately expansion to the Universe,” concluded Musk.