Image: SpaceX
Elon Musk has officially pulled the trigger on one of the most ambitious consolidations in tech and space history. SpaceX has acquired xAI, formally merging the rocket and satellite giant with Musk’s rapidly growing artificial intelligence startup in a move that signals just how serious he is about taking AI beyond Earth.
SpaceX announced the deal on Monday after it was spotted in business filings, which list the newly combined entity under the name K2 Merger Sub 2 — a not-so-subtle nod to the Kardashev scale and Musk’s long-running obsession with civilization-level energy and intelligence. Tesla will now own a chunk of the merged SpaceX-xAI company, following its recent $2 billion investment into xAI. SpaceX last year also reportedly invested $2 billion in xAI.
In its official update announcing the acquisition, SpaceX framed the move as far more than a traditional corporate merger. “SpaceX has acquired xAI to form the most ambitious, vertically-integrated innovation engine on (and off) Earth, with AI, rockets, space-based internet, direct-to-mobile device communications and the world’s foremost real-time information and free speech platform,” the company said.
“This marks not just the next chapter, but the next book in SpaceX and xAI’s mission: scaling to make a sentient sun to understand the Universe and extend the light of consciousness to the stars!”
At the heart of the merger is Musk’s belief that Earth-based data centers simply won’t cut it for the future of AI. SpaceX bluntly states that “global electricity demand for AI simply cannot be met with terrestrial solutions,” arguing instead that “in the long term, space-based AI is obviously the only way to scale.”
That vision hinges on orbital data centers powered by near-constant solar energy. As SpaceX puts it, “Launching a constellation of a million satellites that operate as orbital data centers is a first step towards becoming a Kardashev II-level civilization, one that can harness the Sun’s full power, while supporting AI-driven applications for billions of people today and ensuring humanity’s multi-planetary future.” The company recently filed with regulators seeking permission to deploy up to one million AI-focused satellites into orbit — a plan that now has xAI’s models and talent firmly baked in.
Starship is the linchpin, according to SpaceX. The company notes that with launches “every hour carrying 200 tons per flight,” it could eventually deliver millions of tons to orbit per year, enabling 100 gigawatts — and ultimately terawatts — of AI compute capacity annually. Musk estimates that within “2 to 3 years, the lowest cost way to generate AI compute will be in space.”
Musk summed up the long game succinctly: “The capabilities we unlock by making space-based data centers a reality will fund and enable self-growing bases on the Moon, an entire civilization on Mars and ultimately expansion to the Universe.”
The acquisition also raises fresh questions about SpaceX’s long-anticipated IPO. With both SpaceX and xAI privately held — and now merged — it remains unclear whether Musk still intends to take the newly formed company public, or whether the endgame is an even larger, unified Musk empire debuting as a single entity down the line.
One thing is clear: this isn’t just about AI, rockets, or satellites anymore. Musk is openly architecting infrastructure for what he sees as the next phase of civilization itself.
