SpaceX and xAI have merged in a deal that could enable Elon Musk to pursue plans for a constellation of up to one million satellites intended to power AI data centres in orbit.

The acquisition of xAI was announced in a statement on SpaceX’s website, bringing together Musk’s rocket-and-satellite company with his AI firm. 

According to Bloomberg, the deal reportedly values the combined companies at $1.25tn, with SpaceX at $1tn and xAI at $250bn. This move would create the world’s most valuable private company.

Musk founded xAI in 2023 to compete with rivals such as OpenAI’s ChatGPT and Google’s Gemini in a bid to provide “maximum truth-seeking AI”. Last year, xAI acquired one of Musk’s other ventures X, the social media platform formerly known as Twitter.

In 2002 Musk founded private aerospace company SpaceX, which has launched thousands of satellites and conducted hundreds of orbital missions using its own rockets and boosters. Musk has been vocal about the company’s goal of establishing a self-sustaining colony on Mars.

The merging of the two ventures will help fuel his increasingly costly ambitions in AI and space exploration.

The statement on the SpaceX website, written by Musk himself and signed off with “Ad Astra!” (Latin for ‘to the stars’), confirms the aim of acquiring xAI is to form the “most ambitious, vertically-integrated innovation engine on (and off) Earth”.

It adds that this engine will combine “AI, rockets, space-based internet, direct-to-mobile device communications and the world’s foremost real-time information and free speech platform”.

One way it plans to achieve this is by launching a constellation of a “million” solar-powered satellites, which operate as orbital data centres to support AI-driven applications on Earth and for “humanity’s multi-planetary future”.

“My estimate is that within two to three years, the lowest-cost way to generate AI compute will be in space. It will enable innovative companies to forge ahead in training their AI models and processing data at unprecedented speeds and scales, accelerating breakthroughs in our understanding of physics and invention of technologies to benefit humanity,” Musk said in the statement. 

Although launching AI satellites from Earth is the immediate focus, SpaceX’s next-generation rocket and spacecraft Starship – currently under development and designed for massive payloads – is intended to transport cargo to the Moon. There it could establish factories to manufacture AI satellites on the lunar surface and deploy them in space. 

Musk said: “The capabilities we unlock by making space-based data centres a reality will fund and enable self-growing bases on the Moon, an entire civilisation on Mars and ultimately expansion to the universe.”

While a million satellites sounds like a lot, especially considering there are currently only around 15,000 in orbit, Musk isn’t just speaking hypothetically. On Friday he filed a request with the US Federal Communications Commission to approve the launch.

According to Reuters, while it is unlikely SpaceX will put one million satellites in space, satellite operators sometimes request approval for a higher number of satellites than they intend to deploy to buy design flexibility.

SpaceX isn’t the only company pursing the idea of space-based data centres. In December 2025, US start-up Aetherflux announced plans to launch its first commercial data centre satellite in early 2027. 

Meanwhile, in November 2025, Google announced that its Project Suncatcher will explore building scalable AI data centres in space, with a prototype launch planned for 2027. Equally, Microsoft and Amazon are also betting on space-based computing.