SpaceX has acquired Elon Musk's AI startup xAI, merging the rocket-and-satellite powerhouse with the Grok chatbot maker to unify Musk’s AI and space ambitions, potentially creating the world’s most valuable private company with a combined valuation around $1.25 trillion.

Under the deal, xAI becomes a wholly owned subsidiary of SpaceX, with a suggested share price near $527 based on Bloomberg’s valuation estimates.

The merger aims to scale space-based data centers to power AI, aligning with Musk’s public advocacy that terrestrial centers strain grids and that satellites can enable new data center models.

xAI currently operates two data centers near Memphis and plans a third in Southaven, Mississippi, with further campus expansion in the Mid-South region.

Musk signaled that space-based data centers would rely on a steady stream of satellites, tying potential revenue to SpaceX’s orbital infrastructure while noting regulatory expectations to de-orbit satellites within five years.

The merger envisions space-based AI data centers to meet AI’s power and cooling needs, reflecting Musk’s thesis that space-enabled infrastructure can alleviate environmental and grid stress.

Coverage and context from TechCrunch, Bloomberg, and related reporting from the Washington Post and ProPublica are cited regarding xAI, Grok, and data-center implications.

Musk framed the deal as part of a broader mission to understand the universe and extend consciousness to the stars.

The merger sits within Musk’s broader, interconnected business ecosystem spanning SpaceX, Tesla, Neuralink, The Boring Company, and other ventures.

The timing coincides with SpaceX’s potential IPO plans, with speculation of possible timing shifts that could influence the listing, potentially as early as mid-year.

Context includes prior xAI activity and controversy around Grok and data-center impacts near Memphis, reflecting debates over data handling and community effects.

The story places the merger in the wider portfolio of Musk’s holdings, noting SpaceX and Tesla investments in xAI and the broader leadership roles across his ventures.