Musk's SpaceX acquires Musk's xAI, envisions "space-based AI data centers"

Investing.com -- Elon Musk's SpaceX has acquired his artificial intelligence company xAI, the companies confirmed in a letter published by SpaceX on Monday.

In the announcement, Musk outlined plans to create "the most ambitious, vertically-integrated innovation engine on (and off) Earth," combining AI, rockets, space-based internet, and communications technology.

The move also comes amid a widely-speculated potential public listing for the space company that may, according to numerous reports, value it at as much as $1.5 trillion.

The acquisition aims to address what Musk describes as unsustainable terrestrial power demands for AI data centers. He proposes launching a constellation of satellites functioning as orbital data centers powered by solar energy.

"In the long term, space-based AI is obviously the only way to scale," Musk wrote in the letter. "My estimate is that within 2 to 3 years, the lowest cost way to generate AI compute will be in space."

The plan involves using SpaceX's Starship rocket to launch "millions of tons" of satellites annually. Each satellite would generate approximately 100 kW of computing power, potentially adding 100 gigawatts of AI computing capacity per year.

Now that the SpaceX-xAI merger has been confirmed, the market will likely set its eyes on Musk's eletric car company, Tesla, amid separate rumors late last week that the billionaire entrepreneur was also considering a potential merger between SpaceX and Tesla.

According to that a Bloomberg reprot that cited unnamed sources, such a deal could attract significant interest from infrastructure funds and Middle Eastern sovereign investors. Musk has not commented on the potential Tesla combination.

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