Elon Musk folds xAI into SpaceX, unveiling an audacious plan to move AI infrastructure into orbit and ease Earth’s growing energy and computing constraints.
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| By merging xAI into SpaceX, Musk is betting that orbital, solar-powered data centers can unlock the next phase of global AI growth. Image: CH |
Tech Desk — February 3, 2026:
Elon Musk’s decision to merge his artificial intelligence company xAI into SpaceX signals a dramatic shift in how the world’s most powerful AI systems may be built, powered, and scaled in the future. The move reflects both Musk’s long-standing appetite for technological ambition and a growing industry-wide reckoning with the physical limits of AI on Earth.
The merger unites SpaceX’s rockets and satellite infrastructure with xAI’s computing and model development, creating what Musk has described as a vertically integrated engine for innovation. Strategically, the deal positions SpaceX not just as a launch provider or satellite operator, but as a foundational infrastructure company for next-generation AI.
At the heart of the strategy is energy. Large-scale AI development increasingly depends on enormous data centers that consume vast amounts of electricity and water, often straining local power grids and provoking public backlash. Musk argues that these demands cannot be sustainably met on Earth. His proposed alternative—orbital data centers powered by near-constant solar energy—seeks to bypass terrestrial constraints altogether.
SpaceX plans to deploy satellites that would function as data centers in orbit, drawing power directly from the sun and relying on minimal maintenance. If realized, the approach could dramatically reduce dependence on Earth-based energy infrastructure while allowing AI computing to scale far beyond current limits. The company has floated an eventual constellation of up to one million such satellites, launched by its Starship rocket, which is designed for high-frequency, heavy-payload missions.
The scale of the vision is unprecedented, and so are the unanswered questions. SpaceX has not disclosed when the first data-center satellites might launch, how much the system would cost, or how it would manage challenges such as heat dissipation, latency, cybersecurity, and orbital congestion. Even for a company known for pushing technical boundaries, the proposal would test the limits of engineering, regulation, and space governance.
Financial considerations loom just as large. Bloomberg has reported that the combined SpaceX–xAI entity could be valued at around $1.25 trillion, underscoring how central AI expectations have become to investor perceptions of future growth. xAI alone was valued at $230 billion in a recent funding round, despite being a relatively young company best known for its Grok chatbot.
The merger also fits into Musk’s broader pattern of consolidation. He previously merged xAI with X, the social media platform formerly known as Twitter, folding data, talent, and computing resources into a single ecosystem. With SpaceX now added to that mix, Musk appears intent on controlling not just AI applications, but the full stack—from data and models to power generation and physical infrastructure.
Reports of a potential SpaceX initial public offering add another layer of significance. Musk has long resisted taking SpaceX public, arguing that shareholder pressure could undermine long-term goals such as Mars settlement. But Starship development, interplanetary ambitions, and now space-based AI infrastructure require capital on a scale few private companies can sustain indefinitely.
Ultimately, the xAI–SpaceX merger is less about a single acquisition than about redefining where AI lives. As energy limits, environmental concerns, and geopolitical pressures reshape the technology landscape, Musk is making a bet that the future of artificial intelligence may not be grounded on Earth at all.