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SpaceX merges with xAI, reportedly will seek an IPO valuation of $1.25 trillion

Elon Musk says his space company has merged with his AI company, with the lofty goal of eventually putting data centers in space.

Nate Becker

2/2/26 4:15PM

Elon Musk’s giant space company has merged with his AI company, according to a letter from Musk posted on the SpaceX website.

As part of the reasoning for the deal, Musk cited a pet idea among tech billionaires: powering AI by placing data centers in space.

“Current advances in AI are dependent on large terrestrial data centers, which require immense amounts of power and cooling. Global electricity demand for AI simply cannot be met with terrestrial solutions, even in the near term, without imposing hardship on communities and the environment.

In the long term, space-based AI is obviously the only way to scale...

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

(This concept, by the way, would be exceptionally hard to pull off.)

After the tie-up, the combined company is aiming to go public at a valuation of about $1.25 trillion, according to Bloomberg, which first reported the merger was happening, citing an internal memo.

Tesla, which Bloomberg had previously reported to have been in consideration to be merged among the companies in some way, wasn’t mentioned in the report of the deal. Shares were roughly flat after-hours.

The move would tie together two of Musk’s signature companies — two of the biggest privately held firms in the world. It would also bundle together rockets, satellites, the social media site X, and artificial intelligence all under one company.

An IPO at a valuation of $1.25 trillion would immediately place the combined SpaceX/xAI into the top 10 most valuable publicly traded companies on US exchanges. It would be one of the biggest global IPOs ever by valuation. (The largest IPO on record is Saudi Aramco, which went public in Saudi Arabia valued at about $1.9 trillion in 2019.)

Various reports had said SpaceX was seeking a valuation topping $1 trillion, and some had even floated a valuation exceeding $1.5 trillion.

Musk’s companies are already extremely interconnected, including Tesla’s recent $2 billion investment in xAI.

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Tesla and Google’s Waymo to Senate committee: Fix self-driving laws or China will win

Ahead of their appearances Wednesday at a Senate committee hearing on the future of self-driving, the two biggest names in the sector, Tesla and Google’s Waymo, are talking the same book.

Both companies are warning lawmakers that without a federal framework for autonomous vehicles — something Congress has debated for years and is now considering again as part of broader transportation legislation — China will seize the lead.

“The United States is locked in a global race with Chinese AV companies for the future of autonomous driving, a trillion-dollar industry comparable in strategic importance to flight and space travel,” Waymo Chief Safety Officer Mauricio Peña said in written remarks ahead of the event. “In the absence of US leadership on a national AV legislative framework, Chinese AV competitors will fill the gap and set the safety and technical standards for the rest of the world.”

Tesla Vice President of Vehicle Engineering Lars Moravy, for his part, wrote, “If the US does not lead in AV development, other nations — particularly China — will shape the technology, standards, and global market.” He added, “China will be the dominant manufacturer of transportation for the 21st century.”

The two companies face steep competition from Chinese firms, including Baidu, which operates a robotaxi service, and BYD, whose EVs offer driver assistance technology similar to Tesla’s Full Self-Driving and which has been outselling the US automaker.

Hit the Road, Mac: The Future of Self-Driving Cars

$126B

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Waymo is now worth $126 billion, after raising $16 billion in a funding round led by its parent company, Google. With this capital, Waymo plans to expand its robotaxi service to more than 20 new cities, including international markets.

On Wednesday, Waymo’s chief safety officer will testify at a Senate Committee on Commerce, Science, and Transportation hearing, alongside a representative for Tesla, urging lawmakers to create a national regulatory framework for autonomous vehicles.

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Dan Ives thinks Tesla will someday merge with SpaceX, too

Wedbush Securities analyst Dan Ives is just like us: he thinks that Elon Musk’s Tesla and SpaceX could someday become one company.

In a note this morning, Ives argued there’s a “growing chance” Tesla will eventually merge in some form with newly merged SpaceX and xAI, as Musk builds what he sees as a single, sprawling AI ecosystem spanning both space and Earth.

Over time, Ives wrote, he thinks Musk will look to “combine forces/technologies,” with the long-term goal of owning and controlling more of the AI stack. Ives thinks Musk could achieve that “holy grail” over the next year and a half.

Earlier today, we pointed out the myriad similarities between Tesla and SpaceX — shared impossible missions, common methods for achieving those goals, and a physics-first, economics-later ethos — as well as Musk’s long-standing penchant for knitting his companies together in the first place.