NEW YORK– Elon Musk is merging his space exploration and artificial intelligence businesses into one company, ahead of what is expected to be a massive initial public offering for the company later this year.
His rocket company SpaceX announced Monday that it had bought xAI in an effort to help the world’s richest man dominate the rocket and artificial intelligence companies. The deal combines several of its offerings, including its AI chatbot Grok, its satellite communications company Starlink and its social media company X.
Musk has repeatedly spoken about the need to accelerate the development of technology that would allow data centers to operate in space. He believes this will help overcome the problem of the enormous costs of electricity and other resources in building and operating AI systems on Earth.
It’s a goal Musk suggested in his deal announcement that could be easier to achieve with a combined company.
“In the long term, space-based AI is clearly the only way to scale,” Musk wrote on SpaceX’s website Monday, then added in reference to solar power: “It’s always sunny in space!”
Musk said in his announcement that he estimates “that within 2 to 3 years the cheapest way to generate AI compute will be in space.”
SpaceX will compete in that area with Google, which is working on a research project called Project Suncatcher, which would equip solar-powered satellites with AI computer chips, with a prototype that could be launched as soon as next year.
But Musk’s prediction of a near future of space-based AI supercomputers is not shared by many other companies building data centers, including Microsoft.
“I’ll be surprised if people move from land to low Earth orbit,” Microsoft President Brad Smith told The Associated Press last month when asked about the alternatives to building data centers in the U.S. amid growing community opposition.
Musk already faces stiff competition in the artificial intelligence space, scrambling to compete with rivals like OpenAI, which is also working toward an IPO. Musk’s distaste for OpenAI, which he helped found more than a decade ago, is part of what led him to start xAI in 2023 and build the ChatGPT alternative he called Grok.
Musk has equally ambitious plans for Tesla as he tries to pivot a company with declining car sales to focus more on self-driving taxis and humanoid robots powered by artificial intelligence.
Tesla recently announced a $2 billion investment in xAI.
Musk has previously used his control over multiple companies to combine operations. Tesla bought SolarCity ten years ago. And he recently had xAI buy his social media platform X, formerly called Twitter.
Chatter on Wall Street about the billionaire who continues to merge his many ventures into a giant company called Musk Inc. has taken off in recent months, with some investors speculating that Tesla could also combine with SpaceX.
Forbes magazine estimates Musk’s net worth at $768 billion. He also owns a brain implant company called Neuralink and a tunnel digging company called the Boring Company.
Terms of SpaceX’s purchase of xAI were not disclosed. Among the outside investors in the companies is a fund in which President Donald Trump’s son, Don Jr., is a partner. That company, 1789 Capital, has made more than $1 billion in investments in several Musk companies, including SpaceX, xAI and
As xAI pursues space data centers, it is also moving quickly to expand on Earth. Officials in Mississippi announced last month that the company will spend $20 billion to build a data center near the state’s border with Tennessee.
The data center, called MACROHARDRR, a likely play on Microsoft’s name, will be the third in the Memphis area.
Musk also hopes that the combined company can eventually help achieve another goal he has long talked about: the need to colonize other planets in case there is a natural or man-made disaster on Earth.
Speaking at the World Economic Forum in Davos last week, Musk mused that humanity is a “little candle in a vast darkness, a tiny candle of consciousness that could easily go out.”
