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Elon Musk’s SpaceX is acquiring his artificial‑intelligence start‑up xAI, the company confirmed by publishing a memo from Musk on its website. The smaller firm, known for the Grok chatbot, will be folded into SpaceX, though financial terms were not disclosed. A source familiar with the deal said it values xAI at about $125 billion and SpaceX at $1 trillion — figures that would make SpaceX the most valuable private company ever.
In his memo, Musk said the combination would form an "innovation engine" putting AI, rockets, space-based internet, and media under one roof.
xAI began as a segment of X, formerly known as Twitter, after Musk acquired the social media platform in 2022, using its access to real-time text and information as AI training data.
By spring of 2025, it was independently incorporated and valued more highly by investors than X.
Its main product is Grok, which has come under scrutiny several times over its AI image generation feature. In recent weeks, the European Commission and UK watchdog Ofcom both launched investigations into X over concerns Grok was used to create sexualised images.
xAI said in January it had imposed restrictions on Grok users that limit image editing.
The huge merger comes after Musk's electric car company, Tesla, announced a $2bn investment in xAI last month. Musk told Tesla investors that he envisioned xAI functioning as an "orchestra conductor" for Tesla factories employing autonomous robots.
He also said it would stop manufacturing two car models in favour of producing robots - one of the most significant pivots the company has made.
Tesla moved forward with the xAI investment despite objections from some shareholders, who had questioned the decision to divert resources to another Musk firm. In a vote last year, abstentions and votes against the idea outnumbered those who approved.
SpaceX is also reported to be working on plans to list its shares for public trading.
xAI acquired social media platform X in an all-stock deal last March, with Musk saying the merger would "combine the data, models, compute, distribution and talent".
In the SpaceX memo announcing the xAI merger, Musk said he thought space would provide the solution to the energy needs faced by AI firms.
