Elon Musk’s rocket maker SpaceX has acquired his artificial intelligence startup xAI in a deal that will value the company at $1.25 trillion, CNBC’s David Faber confirmed Tuesday.
The record-setting transaction is the largest merger of all time and values SpaceX at $1 trillion and xAI at $250 billion, according to documents viewed by CNBC.
Musk, who is also CEO of Tesla, announced the deal in a blog post on Monday, saying he’s creating “the most ambitious, vertically-integrated innovation engine on (and off) Earth, with AI, rockets, space-based internet,” and the X social media platform.
The main reason for the merger, he said, is to better build “orbital data centers.”
Bloomberg previously reported the merger valuation.
The deal comes ahead of a highly anticipated blockbuster initial public offering for SpaceX later this year. The Financial Times previously reported the company is looking to raise up to $50 billion at a valuation as high as $1.5 trillion.
The merger deal, which is structured as a share exchange, will convert a share of xAI into 0.1433 share of SpaceX stock. Documents show xAI at $75.46 per share and SpaceX at $526.59 a share.
Bank valuation documents viewed by CNBC value SpaceX at between $859 billion and $1.26 trillion and xAI at between $219 billion and $294 billion.
Another main reason for the merger is to provide more capital to xAI, which makes the Grok chatbot.
The startup is burning through cash as it races to build out infrastructure against rival AI labs such as OpenAI and Anthropic.
OpenAI was last valued at $500 billion in October and Anthropic signed a term sheet last month for a round that valued it at $350 billion.
By comparison, xAI was last valued at about $230 billion in a $20 billion funding round closed last month.
Musk, who was a co-founder of OpenAI and departed in 2018, created xAI in 2023. Its Grok AI tool has recently come under fire for allowing users to create sexualized images, including of children.
SpaceX, which makes satellites and reusable rockets, is in position to benefit from the push to launch data centers in space to feed booming AI demand.
The company is widely known for its Starlink satellite internet service and has contracts with the Department of Defense and NASA, supporting its moon missions.
News of SpaceX’s potential 2026 IPO first broke in December, with Musk calling a report about the planned offering “accurate” shortly thereafter.
The Financial Times previously reported that Musk is preparing the debut for mid-June to time with his birthday and a planetary alignment.
— CNBC’s Lora Kolodny contributed to this story.
