SpaceX Merges with Elon Musk’s AI Firm, Sending Shares Soaring

SpaceX’s merger with xAI creates a single corporate vehicle—X.AI Holdings—valued at roughly $1.5 trillion, according to the Daily Mail, and positions the combined firm to pursue a dual‑track strategy of orbital data‑center construction and deep‑space colonisation. The deal, announced in early May, will see the new entity list on a July IPO, which could become the largest public offering ever recorded. Musk’s vision, as quoted in the Daily Mail, is to “expand the scope and scale of human consciousness” by deploying solar‑powered compute nodes in low‑Earth orbit, a concept that would sidestep terrestrial bandwidth constraints and provide latency‑critical AI services directly from space. The plan also includes an ambitious “one‑million‑satellite” constellation, though the Daily Mail notes that Musk has yet to disclose financing mechanisms for the massive launch cadence required.

The strategic rationale for the merger is anchored in the growing convergence of space infrastructure and artificial‑intelligence workloads. Reuters reports that Musk has already begun reorganising xAI to align its research teams with SpaceX’s satellite engineering groups, a move that should accelerate the development of the proposed orbital data centres. By leveraging SpaceX’s proven Falcon and Starship launch capabilities, X.AI could field a fleet of AI‑optimized payloads far more quickly than a greenfield effort. The Verge adds that the data‑center design will rely on solar arrays and radiation‑hardened processors, enabling continuous operation without the need for costly ground‑based power or cooling systems. If successful, the architecture could provide petaflop‑scale compute for generative‑AI models while reducing latency for edge applications such as autonomous vehicle fleets and real‑time video analytics.

Beyond the commercial upside, the merger underscores the role of space assets in the broader AI arms race and in national defence. The Daily Mail points out that NATO members are committing to a 5 percent rise in defence spending, targeting a $13.4 trillion budget by 2035, with space‑enabled intelligence, surveillance and reconnaissance (ISR) slated to capture 10‑20 percent of that uplift. Satellite constellations like BAE’s Azalea, which deliver ISR data to allied forces, illustrate how orbital platforms are already integral to modern warfare. Mark Boggett, chief executive of the Seraphim Space Fund, is cited saying that “better technology gives you an advantage over your aggressors,” a sentiment echoed by the Daily Mail’s observation that roughly 70 percent of revenues for Seraphim‑backed firms now stem from defence contracts. The S&P Kensho Final Frontiers index, which tracks space‑technology companies, has risen 86 percent over the past year, reflecting investor appetite for firms that can blend aerospace capability with AI processing power.

Critics, however, label the merger as “financial engineering” and warn that the scale of the venture may outstrip Musk’s ability to raise the required capital. The Daily Mail notes the absence of a clear funding roadmap for the one‑million‑satellite constellation, a project that would demand billions in launch services, satellite manufacturing, and ground‑segment support. Moreover, the recent failure of the UK‑based Orbex launch venture serves as a cautionary tale about the technical and regulatory hurdles inherent in scaling commercial space operations. While Musk’s track record with SpaceX and Tesla suggests an ability to overcome such obstacles, the sheer magnitude of the X.AI ambition—colonising Mars, building lunar factories, and operating a trillion‑dollar AI infrastructure in orbit—remains speculative until concrete financing and engineering milestones are disclosed.

If the July IPO proceeds as planned, X.AI Holdings could set a new benchmark for market valuations of hybrid space‑AI enterprises. The Daily Mail projects a post‑IPO market cap of $1.5 trillion, dwarfing the $157 billion valuation of OpenAI’s recent funding round. Such a valuation would hinge on investor confidence that orbital compute can deliver a competitive edge in AI services and that the combined entity can monetize its space assets through both commercial contracts and defence procurement. As the market watches, the merger represents a bold bet that the next frontier of AI performance will be measured not just in teraflops on Earth, but in the kilowatts harvested from sunlight above the atmosphere.