Elon Musk’s SpaceX is in early discussions to merge with artificial intelligence company xAI ahead of a high-profile public offering expected later this year, according to people familiar with the matter. The talks, first reported by Reuters, could bring Musk’s space, AI, satellite, and social media ventures under a single corporate structure.
A Bet on AI Infrastructure Beyond Earth
According to Reuters, the proposed deal would involve exchanging xAI shares for SpaceX stock. The merger would reinforce Musk’s plan to push artificial intelligence infrastructure into orbit, an idea he has promoted as a way to dramatically lower computing costs by relying on solar-powered systems in space.
The news outlet reported that two new entities were created in Nevada on January 21 to support the transaction. Corporate filings show that SpaceX and its chief financial officer, Bret Johnsen, are listed as managing members of one of the entities, while the second names Johnsen as its sole officer. The filings do not explain the purpose of the companies.
Musk, SpaceX, and xAI declined to comment. Reuters said it was unable to determine the valuation, timing, or final structure of the potential merger, noting that discussions remain confidential and could still change. One source told the agency that some xAI executives may be offered cash instead of SpaceX shares, though no agreement has been finalized.
SpaceX is already the world’s most valuable private company. A recent insider share sale valued it at around $800 billion. xAI, meanwhile, was valued at approximately $230 billion late last year, according to The Wall Street Journal. Reuters and other media outlets have previously reported that SpaceX is preparing for an IPO that could value the company above $1 trillion.
Through xAI, Musk is building a massive AI training supercomputer known as Colossus in Memphis, Tennessee. Reuters has reported that SpaceX agreed last year to invest $2 billion in the startup as part of a broader fundraising effort. Speaking recently at the World Economic Forum in Davos, Musk said space would soon become the cheapest place to run large-scale AI systems.
The combination could also strengthen SpaceX’s position in the defense sector. Reuters noted that the Pentagon has been accelerating the use of artificial intelligence across military networks, and xAI already holds a contract worth up to $200 million to supply its Grok chatbot to U.S. defense operations.
This would not be the first time Musk has merged companies he controls. In 2025, he folded social media platform X into xAI through a share swap. Nearly a decade earlier, Tesla acquired SolarCity using its own stock.
Founded in 2002, SpaceX transformed the global space industry with reusable rockets and later expanded into satellite broadband through Starlink. Banks have already been lined up for a potential IPO, which Reuters said could take place as early as this year.