Elon Musk Said one main reason merge SpaceX and its artificial intelligence startup xAI are aiming to build “orbital data centers” more efficiently. That’s for the distant future.

For now, xAI has a more pressing need: cash.

on Monday blog post When announcing the merger of the two companies, Musk estimated that “within 2 to 3 years, the cheapest way to generate artificial intelligence computing will be in space.” But xAI needs a lot of capital to fund its massive infrastructure buildout as the three-year-old company tries to catch up GoogleOpenAI and Anthropic in the booming generative artificial intelligence market.

SpaceX reportedly plans to go public this year in what could be a record-breaking IPO that could represent Musk’s clearest path to capital. The company plans to raise up to $50 billion Valuation As much as $1.5 trillion, according to Reuters.

A major key to SpaceX’s growth is its satellite internet service Starlink, which currently has about 9,000 satellites in orbit and about 9 million customers. Recently, it received authorization from the U.S. Federal Communications Commission, Another 7,500 The satellite enters orbit.

Tim Farrar, president of satellite and telecommunications industry research firm TMF Associates, It said SpaceX cannot use the funds for its existing operations because of the limited number of rocket launches available each year to launch its Starlink satellites into space.

Farrar said integrating xAI into SpaceX would allow Musk to take advantage of investors’ insatiable appetite for AI holdings while also ensuring the AI ​​company’s financial health despite mounting losses. The Information reported late Monday that xAI told investors it burned through about $9.5 billion in the first nine months of 2025.

“People are pouring tens of billions of dollars into AI companies right now, and in six months or 12 months, they may change their minds,” Farrar said. “Getting the money is feasible” now, but it may not be forever.

In early January, xAI shut down $20 billion funding round The valuation is approximately US$230 billion. OpenAI was valued at $500 billion in October, and the company reportedly hopes to raise its valuation to around $750 billion in its next funding round. Anthropic signed a financing term sheet this month that values ​​the company at $350 billion.

In addition to friendly capital markets, Musk has benefited from an extremely favorable regulatory environment as the Trump administration rolls back environmental, antitrust and other regulations.

Monday’s blog post didn’t mention anything requiring regulatory approval, and Musk hinted in the first sentence of his statement that the deal was complete. Nevada public records obtained by CNBC show the deal closed on February 2, with Space Exploration Technologies Corp. listed as the company’s “managing member.” AI holding.

Of particular importance to Musk are the recent appointments of his business partners, former SpaceX investors and customers Jared Isaacman As head of NASA. Isaacman supports moves to accelerate the expansion of the agency’s contract with SpaceX. FCC Chairman Brendan Carr have I have always been a strong supporter of SpaceX Starlink.

The landscape of technology M&A has also undergone tremendous changes. president donald trump The White House and Republicans control both houses of Congress. The FTC is now led by Trump appointee Andrew Ferguson instead of Lina Khan, who is known for blocking big tech deals. Joe Biden’s Presidency.

On the AI ​​front, Musk’s longtime friend David Sacks, the White House cryptocurrency and AI czar, has urged the federal government to limit the level of oversight that AI labs face as they pursue aggressive growth strategies. In December, President Trump signed a executive order Issuing a single regulatory framework for AI reduces the power of individual states (i.e. blue states like California and New York) to impose their own rules.

“To win, U.S. AI companies must be free to innovate without burdensome regulation,” Order explain. “But excessive state regulation hinders this necessity.”

Although Musk is still three years away from a second Trump administration, he may have only a small window of unified Republican control, with the midterm elections set to take place in nine months and the president’s favorability ratings continuing to decline.

Musk sold billions of dollars worth of stock during the 2022 leveraged buyout of Twitter (which later became X) Tesla Stock to fund the transaction. He also hired dozens of employees and even some executives from SpaceX, Tesla and tunneling company The Boring Co. to help him complete acquisitions and make sweeping changes to the platform.

At Tesla, Musk has entered into multiple related party transactions with SpaceX and, most recently, xAI. For example, Tesla sells car parts and solar equipment to SpaceX, and the automaker relies on SpaceX to develop special alloys for its Cybertruck.

2025, Tesla Megapacks worth $430 million worth of backup batteries were sold to xAI, according to one company. Archive Last week, the business accounted for about 3.4% of Tesla’s full-year energy revenue. The batteries power the data infrastructure xAI is building around Memphis, Tennessee.

Shortly before the filing, Tesla said it would invest $2 billion in xAI as part of the company’s latest funding round. July 2025, SpaceX Reportedly investing xAI has also invested $2 billion.

Farrar said Musk’s biggest fans and institutional investors are willing to support a complex web of deals, or “Muskonomi” Part of that is because they understand the symbolism of keeping his entire portfolio strong.

“The whole thing comes down to confidence in him,” Farrar said. “If any part of his empire falls by the wayside or goes bankrupt, it undermines everything.”

watch: SpaceX could be first $500 billion IPO, says Eric Hippeau of Lerer Hippeau