by Elon Musk SpaceX said Monday it is acquiring artificial intelligence startup xAI, a move that significantly expands the rocket and satellite company’s ambitions in data centers and advanced computing.

The agreement brings together from SpaceX launch and satellite operations with the fast-growing AI company, giving Musk tighter control over the infrastructure, power demands and computing power that increasingly define the AI ​​competition.

The transaction values ​​SpaceX at about $1 billion and xAI at about $250 billion, according to a person familiar with the matter, underscoring the scale of the combined company.

SpaceX said in a statement that the acquisition was driven by expectations that global demand for smart computing will soon outstrip the electricity and cooling capacity available on Earth.

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xAI and Grok logos seen on February 16, 2025. (Dado Ruvic/Reuters)

Musk said the combined company plans to explore space-based data centers powered by near-constant solar energy as a way to overcome these Earth-based energy limitations.

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The SpaceX logo is seen displayed on a smartphone screen. (Thomas Fuller/SOPA Images/LightRocket via Getty Images)

“In the long term, space-based artificial intelligence is obviously the only way to scale,” Musk said, laying out a vision that relies on space infrastructure to support future computing needs.

The purchase sets a new record for the world’s largest merger and acquisition treat SpaceX was already the world’s most valuable private company, last valued at about $800 billion during a recent sale of preferred stock.

The merger comes as SpaceX prepares for a possible initial public offering later this year that could value the company at more than $1.5 trillion, according to people familiar with the plans.

SpaceX’s spacecraft lifts off during its fifth flight test, in Boca Chica, Texas, USA, on October 13, 2024. (Kaylee Greenlee Beal/Reuters)

The deal could face scrutiny from regulators and investors over governance, valuation and conflicts of interest, given Musk’s overlapping leadership roles at various companies and the potential transfer of engineers, technology and contracts between entities.

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SpaceX has billions of dollars in federal contracts with NASA, the Defense Department and U.S. intelligence agencies, all of which may have authority to review acquisitions important to national security and other risks.