SpaceX and xAI could be merging. Why Elon Musk is doing it-and what might happen next

"Two of Elon Musk's best-known companies look likely to be headed for a mega merger ahead of a mooted IPO. SpaceX, the South African entrepreneur's space exploration firm, and xAI, the AI company he established in 2023 to challenge OpenAI, are reportedly in discussions ahead of a merger and initial public offerings. Two business entities were established in Nevada on January 21, Reuters says, that are potentially designed to facilitate the deal. Combined, the two businesses are worth more than $1 trillion."

"The IPO could happen in mid-June. Because that's a point when Jupiter and Venus will be in conjunction with one another, passing close to each other in their respective orbits, the Financial Times separately reported. It's suggested that the merged entity would be looking to raise up to $50 billion, nearly twice the amount of the largest IPO in history to date-when Saudi Aramco's 2019 raise of $29 billion-and would be doing so at a valuation of $1.5 trillion."

"Such a merger is big news, in part because of Musk's name and infamy, but also because it represents the pooling of two firms that appear at first not to be connected. But there are business synergies that make sense, says Caleb Henry, director of research at Quilty Space. "I view the merger as Musk's way to vertically integrate AI services by providing xAI with satellite infrastructure for on-orbit compute," he says."

SpaceX and xAI are reportedly in talks to merge ahead of potential initial public offerings, with two Nevada entities formed January 21 possibly set up to facilitate the transaction. Combined valuation of the businesses is reported at over $1 trillion, and Tesla could be involved. An IPO is mooted for mid-June, tied to a Jupiter-Venus conjunction, and the merged entity is said to seek up to $50 billion in fundraising at a $1.5 trillion valuation. Observers note synergies in supplying xAI with SpaceX satellite infrastructure for on-orbit compute, and Musk has promoted space-based data centers while xAI operates the Grok chatbot.

Read at Fast Company