This is a corporate merger beyond imagination, a super transaction that only Elon Musk could advance and bring to fruition.
The largest merger in history is heading towards the stars. On the evening of February 2nd, global billionaire Elon Musk issued a statement on the SpaceX website, formally announcing SpaceX's acquisition of xAI. This deal, brewing for weeks, has finally been settled, giving birth to a super unicorn with a valuation of $1.25 trillion.
One is the world's largest private space exploration company, the other is a leading artificial intelligence and social networking startup. They seem to have little overlapping business, but share one commonality: both were founded by Musk, where he holds absolute decision-making power.
Musk wrote in the statement: "SpaceX has acquired xAI, creating the most ambitious, vertically integrated innovation engine on Earth (and beyond), encompassing AI, rockets, space-based internet, direct-to-mobile device communications, and the world's most advanced real-time information platform."
He continued outlining his visionary plan: "This not only marks the next chapter in the missions of SpaceX and xAI, but opens a completely new volume: our goal is to create a sentient sun to understand the universe and extend the light of consciousness to the stars."
Internal documents obtained by CNBC reveal the transaction was conducted via a stock swap. xAI shareholders will exchange their shares for SpaceX stock at a ratio of 0.1433—meaning each share of xAI stock can be exchanged for 0.1433 shares of SpaceX stock. Certain xAI executives also had the option to receive cash at a price of $75.46 per share.
Post-transaction, SpaceX's valuation reaches $1 trillion, while xAI is valued at $250 billion, resulting in a combined entity valuation of $1.25 trillion. In nominal valuation terms, this deal becomes one of the largest mergers and acquisitions in global history, breaking a record held for 25 years—Vodafone's $203 billion hostile takeover of Germany's Mannesmann in 2000.
The merged company plans an Initial Public Offering (IPO) later this year, with an expected fundraising scale of up to $50 billion, surpassing the 2019 record set by Saudi Aramco's $29 billion IPO to become the largest ever. The IPO valuation could reach $1.5 trillion. Rumors suggest Musk might push for the listing around his birthday at the end of June.
The left-hand-right-hand merger tactic proves effective yet again. Although Musk describes the deal as "heading towards the cosmic stars," its immediate catalyst is the AI industry's voracious appetite for capital. Previously reported by Bloomberg, xAI's monthly cash burn was approaching $1 billion, a massive funding gap forcing Musk to reconsider the structure of his business empire.
Having another profitable, higher-valued company under his control acquire xAI, blurring corporate boundaries and consolidating capital, became an inevitable choice. Just one week before the SpaceX-xAI merger announcement, Tesla had disclosed a $2 billion investment in xAI, purchasing preferred shares in xAI's $20 billion Series E round. Now, with xAI becoming a SpaceX subsidiary, Tesla shareholders effectively hold a small indirect stake in SpaceX through this investment.
Arranging for Tesla to acquire xAI would have been riskier, as Tesla is a publicly listed company where Musk holds less than 20% of shares and lacks super-voting rights. Numerous minority shareholders frequently sue over his controversial business decisions, even successfully overturning his massive compensation package once.
In contrast, SpaceX is not yet public; Musk holds a 42% stake with voting power reaching 79%. His stake in xAI is even higher at 49%. A merger between two of his private startups allows Musk to make the final decision single-handedly.
Electrek, an electric vehicle-focused media outlet, pointedly commented: "Let's be clear: Musk bailed out xAI, a money-burning virtual furnace. Whether as a social media platform or an AI company, xAI lags behind competitors. This is essentially a replay of the 2016 SolarCity bailout."
Using the financially robust "eldest son" to rescue the cash-strapped "younger son" is not a first for Musk. In 2016, when SolarCity, a solar panel company he founded and was the largest shareholder in, faced financial trouble, Musk arranged for Tesla to acquire it for $2.6 billion, integrating it into Tesla Energy. This acquisition sparked "conflict of interest" lawsuits from Tesla shareholders, ultimately settled with Tesla agreeing to pay $60 million.
In March 2025, Musk again arranged for the rapidly appreciating xAI to acquire social network X for a total valuation of $45 billion. In October 2022, under legal pressure, Musk was forced to acquire Twitter for the original $44 billion price. He subsequently implemented drastic layoffs and reforms, rebranding it as X, which led to operational instability, advertiser flight, and a valuation一度缩水到 $10 billion at one point.
Although X's valuation recovered somewhat following Musk's support for Trump's re-election, it still faces heavy debt repayment pressures. Musk initially borrowed $13 billion from banks for the Twitter acquisition, with annual interest alone exceeding $1.5 billion.
Therefore, this transaction essentially used xAI's high valuation to "prop up" X's shareholders, allowing investors, including Musk himself, to exit their positions and extricate X from its debt quagmire. Of course, the deal also has genuine synergy: X's social media data can be used to train Grok.
A monthly cash burn of $1 billion. xAI's survival dilemma is the most direct driver of this merger. Founded in March 2023, this AI company has become one of the world's biggest cash-burning startups in under three years. This isn't due to poor management by xAI, but rather a common challenge facing the AI industry.
Last year, Bloomberg reported that xAI burned through approximately $8 billion in cash in the first nine months of 2025, equivalent to nearly $1 billion per month. This massive expenditure primarily flowed into the construction of the Colossus supercomputing cluster in Memphis, Tennessee. The facility boasts 200,000 Nvidia H100 GPUs, making it one of the largest AI computing centers globally and xAI's biggest competitive advantage. The company plans to expand its GPU scale to 1 million units, requiring hardware investments alone in the tens of billions of dollars.
Even more staggering is the power demand. To get the AI center operational quickly, Musk even shipped in generator sets from overseas, assembling them on-site in Memphis: efficiency first, regulation second—a approach very much in character for Musk. Yet this still falls short of demand, with the Memphis data center's power consumption already reaching hundreds of megawatts.
xAI also plans to build a natural gas power plant exceeding 1 gigawatt in Mississippi, dedicated solely to powering "Colossus 2." This plan has already sparked strong opposition from the local community, with the NAACP and environmental groups attempting to block xAI's use of gas turbines, while residents complain about noise and air pollution.
In stark contrast to its疯狂 expenditure, xAI's revenue lags far behind. The company's projected revenue for 2025 is only $500 million, with a 2026 forecast of just $2 billion, while expenditures are expected to exceed $13 billion. xAI's revenue generation capability is noticeably weaker than its competitors.
For comparison, OpenAI expects 2025 revenue of $12.7 billion; while also not yet profitable, it demonstrates stronger commercialization capabilities. Anthropic, firmly established in the enterprise market, reported revenue exceeding $3 billion last year, with this year's expected revenue recently revised upwards to a maximum of $26 billion.
Although xAI conducted multiple large funding rounds in 2025 ($6 billion in May, $10 billion in September, and another $15 billion in November), at the current burn rate, these funds would only last a little over a year. Had it not been acquired by SpaceX, xAI would still have needed to raise over $10 billion this year. With the shadow of an AI bubble growing heavier, future fundraising could face greater uncertainty and negotiation difficulties.
SpaceX恰恰 possesses what xAI needs most: stable and rapidly growing cash flow. According to Reuters, SpaceX achieved approximately $8 billion in profit in 2025, with revenue between $15 billion and $16 billion; revenue this year is expected to grow to $23.8 billion, a 53.5% increase.
The core driver of revenue growth is the Starlink satellite internet business. In 2025, Starlink contributed $10.4 billion in revenue, accounting for 69% of total revenue; it is projected to reach $18.7 billion in 2026, representing 79%. In contrast, SpaceX's rocket launch business is growing slowly, with 2026 revenue expected to increase by only 9%.
Starlink is not only a cash cow but also a vast infrastructure network. As of January 2026, Starlink had over 9,422 satellites in orbit, constituting 65% of global active satellites, operating in 155 countries with approximately 9 million active users. After completing network construction, Starlink achieved profitability for the first time in 2024, entering a stable operational phase.
The vision for space-based data centers. Of course, Musk emphasized a even more炫酷的 "space-based data center" vision. He wrote: "Current AI advancements rely on large terrestrial data centers, requiring massive amounts of power and cooling. The global AI power demand simply cannot be met by terrestrial solutions, burdening communities and the environment even in the short term."
"In the long run, space-based AI is clearly the only way to scale. To utilize one-millionth of the sun's energy requires over a million times more energy than our civilization currently uses! The only sensible solution is to move these resource-intensive workloads to a place with vast energy and space. I mean, there's a reason it's called 'space'."
He further predicted: "I estimate that within 2 to 3 years, the lowest-cost way to obtain generative AI compute power will be in space. This cost efficiency alone will allow innovative companies to advance AI model training and data processing at unprecedented speed and scale, accelerating our understanding of physics and breakthroughs in technology beneficial to humanity."
Musk is gradually advancing this seemingly sci-fi concept. On November 2, 2025, SpaceX's Falcon 9 successfully launched the Starcloud-1 test satellite, performing the first in-orbit verification of AI data processing capabilities using onboard Nvidia H100 GPUs. In January 2026, SpaceX applied to the Federal Communications Commission for permission to launch 1 million satellites, explicitly stating these satellites would be used to build orbital data centers.
From this perspective, the impact of this merger on the entire industry is already becoming apparent. In the space industry, competition will intensify: Amazon's Project Kuiper might accelerate integration with Blue Origin, and Google's Project Suncatcher space-based TPU chip satellite project could speed up. Traditional satellite manufacturers like Thales and Boeing face disruptive challenges—they are accustomed to building single geostationary satellites costing hundreds of millions of dollars with 15-year lifespans, whereas the Starlink model involves mass-producing cheap, low-earth orbit satellites with lifespans of only 5 years.
Polarized views within the investment community. Reactions within investment circles are also quite polarized. Many analysts believe in Musk's stellar vision and are optimistic about the merged company's prospects. Ali Javaheri, Senior Emerging Spaces Analyst at PitchBook, stated: "Starlink is already a cash flow engine; now it adds an AI revenue layer on top, while also becoming a distribution platform for AI services and data. Through policy changes allowing certain customer data for model training and the prospect of orbital data centers, SpaceX is positioning itself as an integrated infrastructure platform serving both commercial and government use cases, which is a stronger narrative for going public."
Furthermore, Andrew Rocco, a strategist at Zacks Investment Research, believes the merger makes SpaceX "more attractive" to investors by eliminating concerns about Musk's divided attention and multitasking.
Analysts also mentioned the future possibility of integration between SpaceX and Tesla. Wedbush analyst Dan Ives noted in a research report that Tesla has an "increasingly significant opportunity" to integrate in some form with the newly merged SpaceX-xAI entity, as Musk is building a single, vast AI ecosystem spanning space and Earth.
Bloomberg previously reported discussions about a potential merger between SpaceX and Tesla. While Tesla is not part of the current transaction, long-term integration seems inevitable. The ultimate outcome could be a tech empire spanning space, AI, automotive, social media, and brain-computer interfaces—potentially the most extensive vertically integrated entity in history.
However, some investors expressed measured dissatisfaction. Ross Gerber, an investor in both Tesla and xAI, was more blunt: "It's like a bunch of overvalued companies merging into one giant, overvalued mess run by Musk. But this is now a pure Musk play. Like, you want to invest in Musk? Then you just have to accept it."
TD Cowen analyst Gregory Williams pointed out that introducing "large language model risk" into SpaceX increases the overall risk profile. Private investor Michael Sobel mentioned hearing concerns about the deal from SpaceX shareholders. He said many, while trusting Musk and acknowledging the business logic, still couldn't help but remark: "Well... this needs to be watched closely."
Some analyses also noted that platform X is a major beneficiary of this merger. Social Media Today suggested that post-merger, X would become a line item on SpaceX's financial statements, reducing emphasis on X's advertising revenue and lessening Musk's need to compromise with advertisers.
Space-based AI is the only path forward. Within the AI industry, the signal from this merger is equally clear: standalone AI startups struggle to survive and must attach themselves to cash-flow-positive parent entities. OpenAI relies on Microsoft's $73 billion investment and continuously seeks backing from giants like SoftBank and Nvidia; Anthropic depends on funding from Google and Amazon, recently securing another $5 billion from Microsoft. Now, xAI has also found its "lifeboat" in SpaceX.
From Musk's personal perspective, this merger marks a strategic shift from a "decentralized empire" towards a "centralized ecosystem." The completion of the xAI-X merger in March 2025, Tesla's $2 billion investment in xAI, SpaceX's own $2 billion investment, and now SpaceX's acquisition of xAI reflect the harsh reality of capital demands in the AI era: even Musk finds it difficult to support AI's massive investments through a single company.
For investors, the real questions are "can the combined entity generate genuine synergies?" and, more critically: can xAI prove its value before burning through SpaceX's cash? If xAI continues burning $1 billion monthly, even Starlink's annual revenue exceeding $10 billion won't last long. Unless xAI can rapidly increase revenue or significantly reduce costs, this merger could conversely become a drag on SpaceX.
From a macro-industry perspective, this merger will usher in a new era of "intelligent space exploration." Previously, space exploration was limited by communication bandwidth and human reaction times; the merged entity will propel AI directly into deep space. This will significantly accelerate the advancement of Mars colonization plans, as on Mars, where signal delays can be minutes long, only autonomous robots and support systems with strong AI capabilities can truly operate.
Musk insists the merged entity will be better positioned to deploy "space-based AI data centers." Theoretically, this could overcome the limitations Earth-based data centers face regarding power consumption and land resources. Musk wrote in an open memo to employees: "In the long run, space-based AI is clearly the only path to achieving scale."
Furthermore, this merger also represents the beginning of "compute decoupling." If Musk successfully establishes a vast solar-powered computing阵营 in orbit, xAI would no longer be subject to any single country's power grid or territorial sovereignty. This "space-based AI" would possess greater neutrality and global coverage, forcing competitors like Google and OpenAI to re-evaluate their own infrastructure layouts.
Setting aside the underlying funding needs, the merger of SpaceX and xAI is Musk's grand attempt to simultaneously propel humanity's physical presence (via space technology) and collective intelligence (via AI technology) into the cosmos. The merged entity will become a pioneer for humanity's journey towards an interstellar civilization.
In this sense, the bell ringing for SpaceX's IPO in a few months might just be the opening whistle for the true convergence of the great space age and the powerful artificial intelligence era.
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