Elon Musk’s rocket maker SpaceX will acquire his artificial intelligence startup xAI, valuing it at $1.25 trillion, CNBC’s David Faber confirmed Tuesday.
The record deal is the largest merger in history, valuing SpaceX at $1 trillion and xAI at $250 billion, according to documents seen by CNBC.
Mr. Musk, who is also the CEO, teslaannounced the deal in a blog post on Monday, saying it is building “the most ambitious vertically integrated innovation engine on Earth (and beyond) using AI, rockets, and the space-based Internet” and the X social media platform.
He said the main reason for the merger was to improve the construction of “orbital data centers.”
Bloomberg previously reported on the merger valuation.
The deal comes ahead of SpaceX’s major initial public offering scheduled for later this year. The Financial Times previously reported that the company was aiming to raise up to $50 billion at a valuation of $1.5 trillion.
The merger agreement is structured as a stock exchange, with xAI shares converting into 0.1433 SpaceX shares. According to the document, xAI is priced at $75.46 per share, while SpaceX is priced at $526.59 per share.
SpaceX is valued at $859 billion to $1.26 trillion, and xAI is valued at $219 billion to $294 billion, according to bank valuation documents seen by CNBC.
Another main reason for the merger is to provide more capital to xAI, which makes the Grok chatbot.
The startup is running out of money as it races to build infrastructure with rival AI labs like OpenAI and Anthropic.
OpenAI was last valued at $500 billion in October, and Anthropic signed a term sheet last month for a round valued at $350 billion.
By comparison, xAI was ultimately valued at about $230 billion in a $20 billion funding round that closed last month.
Musk, who co-founded OpenAI and left the company in 2018, developed xAI in 2023. The company’s Grok AI tool has recently come under fire for allowing users to create sexually explicit images that include children.
SpaceX, which makes satellites and reusable rockets, stands to benefit from the push to launch data centers in space to meet burgeoning demand for AI.
The company is widely known for its Starlink satellite internet service and has contracts with the Department of Defense and NASA to support moon missions.
News of SpaceX’s possible 2026 IPO first broke in December, shortly after Musk said reports about the planned public offering were “accurate.”
The Financial Times previously reported that Musk was preparing for his mid-June debut to coincide with his birthday and planetary alignment.
—CNBC’s Lora Kolodny contributed to this article.
