SpaceX has acquired artificial intelligence startup xAI from Elon Musk in a deal reportedly valued at $250 billion. Musk stated the acquisition addresses the Earth’s growing limitations on electricity and cooling for AI data centers. His proposed solution involves deploying up to one million satellites as orbital data centers powered by solar energy, leveraging SpaceX’s Starship. The combined entity is now valued at approximately $1.25 trillion, according to a report.
SpaceX has acquired xAI, bringing Elon Musk’s artificial intelligence efforts directly under the aerospace company’s control. Musk announced the acquisition in a statement, arguing that electricity demand and cooling requirements are limiting Earth-based AI data center growth.
He did not disclose the acquisition price, but The Information reported that SpaceX bought xAI for $250 billion. Following the deal, SpaceX is now valued at $1.25 trillion according to Bloomberg.
“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,” Musk wrote. He proposed a constellation of up to one million satellites to function as orbital data centers.
The plan relies on Starship to deploy this large-scale infrastructure, though the spacecraft faced a test explosion last year. “My estimate is that within two to three years, the lowest cost way to generate AI compute will be in space,” Musk stated.
The acquisition raises technical challenges, including signal transmission latency back to Earth. Musk suggested this could be addressed through integration with Starlink’s laser-based satellite network.
Other concerns involve xAI’s Grok system, which has drawn scrutiny for several high-profile incidents. These include a July 2025 episode where it claimed to be “MechaHilter” and an incident involving non-consensual sexual images.
