SpaceX in merger talks with xAI ahead of planned IPO

Elon Musk's SpaceX and xAI are in talks to merge ahead of a major public offering planned for later this year. This merger would combine Musk's rockets, Starlink satellites, the X social media platform, and Grok AI chatbot. SpaceX aims to advance its plan to launch data centers into orbit in the escalating AI competition against firms like Google and OpenAI.

Under the proposed merger, xAI shares would be traded for SpaceX shares. Although discussions are ongoing and no final agreement has been made, some xAI executives might receive cash instead of stock.

Musk believes space-based AI processing will significantly reduce costs. The deal could enhance SpaceX’s prospects for defense contracts as military networks increasingly adopt AI technologies. SpaceX has been valued at $800 billion, while xAI is valued at $230 billion, and both companies are well-positioned for public offerings.