Musk confirms SpaceX–xAI merger talks to fund AI expansion

Elon Musk has confirmed that his companies SpaceX and xAI are in active discussions about a potential merger, driven by the rising cost of large-scale AI development.

Musk acknowledged the talks with a brief “Yes” response to a post on X. The proposed combination is intended to support xAI, whose operations are estimated to cost around $1 billion per month.

Bloomberg, citing people familiar with the matter, reports that both companies have already briefed some investors on the plan. An announcement could come as soon as this week, although sources caution that the deal could still be delayed or fall apart.

The talks reflect the growing capital intensity of advanced AI systems, which neither of Musk’s companies is well positioned to finance independently. If completed, the merger would bring together SpaceX, valued at roughly $800 billion as of December, and xAI, which was valued at $200 billion in September. Gwynne Shotwell, SpaceX’s president and chief operating officer, could join Musk in leading the combined entity.

Analysts say the merger could also support longer-term strategic ambitions, including the deployment of data centers in orbit. SpaceX has already filed applications to place up to one million satellites into Earth orbit. The combination could also accelerate work on the Starship heavy-lift rocket, strengthening SpaceX’s chances of securing large contracts, including launches for the US Space Force, the Golden Dome missile defense system, and NASA’s Artemis lunar missions.