Elon Musk’s rocket company
SpaceX has
acquired xAI, the artificial company founded by Musk three years ago, in a massive, and unconventional, deal that combines the two privately held firms into a company with an astounding $1.25 trillion reported valuation and plans for a historic IPO this year.
Musk, who is the CEO of both companies, cited the potential for space-based data centers as one of the most important benefits of the combination, even though the concept is still unproven and largely theoretical. “Global electricity demand for AI simply cannot be met with terrestrial solutions, even in the near term,” Musk wrote in a
SpaceX blog post. “By directly harnessing near-constant solar power with little operating or maintenance costs, these satellites will transform our ability to scale compute,” Musk wrote.
xAI's flagship product, Grok, a chat which has recently been blocked in some countries for producing sexualized deepfakes of women, went completely unmentioned in the announcement.
While reports of a potential deal emerged last week, the stratospheric value of the transaction and the swiftness with which it closed left many industry observers in awe, underscoring the massive expectations around AI as well as fears of an overheated market that could be due for a reckoning.
According to reporting in
Bloomberg, the deal between SpaceX and xAI will lead to a combined enterprise value of $1.25 trillion, with shares of xAI valued at $526.59 apiece. Musk has reportedly been hashing out the potential terms of a SpaceX IPO this year that would
value the company at $800 billion, setting the stage for what could be the largest initial public offering of all time.
—Amanda Gerut 