Image: SpaceX Starship ignition during IFT-5 Credit: Steve Jurvetson Source: https://commons.wikimedia.org/wiki/File:SpaceX_Starship_ignition_during_IFT-5.jpg (original on Flickr: https://www.flickr.com/photos/jurvetson/54070598877/) License: CC BY 2.0 (https://creativecommons.org/licenses/by/2.0) Modifications: Cropped to 16:9 and resized to 1920x1080.
SpaceX-xAI deal targets space data centers
WASHINGTON, Feb. 5 — SpaceX has acquired Elon Musk’s artificial intelligence startup xAI, creating a combined company focused on building orbital data centers to power AI workloads, the companies said in statements and reports Reuters and SpaceNews.
Musk said the merger is aimed at moving computing off Earth because traditional facilities require immense power and cooling, a rationale he outlined in a company memo described by TechCrunch and echoed in SpaceNews coverage of the announcement.
Valuation and IPO backdrop
The transaction values the combined company at about $1.25 trillion, with SpaceX at $1 trillion and xAI at $250 billion, making it the biggest merger on record, according to documents cited by CNBC.
The tie-up also lands as SpaceX prepares for a potential public offering in 2026; the company has discussed an IPO that could value it around $1.5 trillion, a possibility cited by Reuters, while SpaceNews reported internal planning for a 2026 debut.
Orbital data center plan
SpaceX has already asked regulators for permission to launch up to one million solar‑powered satellites designed as orbital data centers, a plan outlined in an FCC filing reported by Reuters and expanded upon by Ars Technica.
Industry experts told Reuters that major hurdles remain, including radiation that can degrade advanced chips and the challenge of cooling high‑performance processors in vacuum conditions.
Competitive landscape
Big Tech interest is growing; Reuters noted that Alphabet and Blue Origin have explored space‑based computing concepts, underscoring a broader race to meet surging AI demand.
SpaceX’s vertically integrated capabilities — from a high‑cadence launch fleet to mass production of satellites — give it structural advantages that analysts highlighted in Reuters’ analysis of the merger’s strategic logic.
Still, analysts caution that timelines for commercially viable space data centers could stretch for years, leaving investors to weigh near‑term execution risks against Musk’s long‑term vision, as summarized by Reuters.
