Elon Musk is moving to combine his rocket company, SpaceX, with his artificial intelligence startup, xAI, according to people familiar with the matter, reports Bloomberg.
The discussions come as the financial burden of building high-end AI systems continues to escalate, forcing Musk to look for ways to pool resources across his business empire.
People close to the situation say a formal agreement could be announced as soon as this week. However, they warned that the talks are private and could still fall apart or take longer to finalize. If the deal goes through, it would unite two of the world’s most valuable private companies.
According to people familiar with the companies’ finances, xAI was recently valued at about $200 billion US following its latest funding round, while SpaceX has been preparing for a share sale that could put its valuation at roughly $800 billion US. People familiar with xAI’s operations said the startup has been burning through cash at a rapid pace, estimated at around $1 billion per month, as it tries to keep up with rivals such as OpenAI and Google.
While SpaceX is widely viewed as Musk’s most stable success (think about the billions in revenue from Starlink), the benefits of a merger are primarily being driven by Musk’s long-term vision.
People familiar with the talks say Musk is interested in using SpaceX’s infrastructure to build massive data centres in orbit (at least 1 million). This would theoretically allow xAI to bypass the high costs of cooling and powering AI hardware on Earth. Last week, SpaceX reportedly asked U.S. regulators for permission to launch up to one million satellites to support this space-based computing goal.
Insiders say that Gwynne Shotwell, the longtime president and COO of SpaceX, is expected to play a vital role in managing the combined entity. The leadership team at xAI was also recently bolstered by the hire of Anthony Armstrong, a former Morgan Stanley executive.
Musk replied “Yes” to a post from Aaron Burnett, a senior tech executive who has worked closely with him across his companies, including Tesla. Burnett shared the Bloomberg report on X and wrote, “Explore the Universe 🤝 Understand the Universe.” Musk’s brief response appeared to signal agreement with the reporting, as he did not dismiss or challenge the story, something he often does publicly when reports are incorrect.
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