SpaceX Acquires xAI to Build Orbital AI Data Centers | News
SpaceX has acquired artificial intelligence firm xAI in a transaction that consolidates the two companies and places development of space-based data centers at the center of its strategy, according to a company announcement on February 2, 2026. The acquisition makes xAI a wholly owned subsidiary of SpaceX and aligns Starlink’s satellite network, xAI’s AI systems including the Grok language model, and SpaceX’s launch capabilities toward deploying compute infrastructure into Earth orbit, a spokesperson said.
SpaceX announced the acquisition on its website, framing the deal as a strategic step to address power and cooling constraints faced by terrestrial computing infrastructure supporting advanced AI workloads. Elon Musk, CEO of both SpaceX and xAI, outlined plans for orbiting data centers powered by near-constant solar energy as a means to meet future AI compute demands.
SpaceX’s purchase of xAI follows filings with the Federal Communications Commission that seek authorization to operate up to one million satellites configured to serve as optically linked compute platforms in low Earth orbit, leveraging SpaceX’s Starship launch system. The companies did not disclose detailed financial terms in their public announcement, but multiple outlets report that the combined entity has an estimated valuation of around $1.25 trillion, with share pricing around $526–$527 and potential plans for an initial public offering later in 2026.
Transaction and Corporate Structure
SpaceX’s acquisition of xAI makes the AI developer a wholly owned subsidiary and integrates xAI’s AI assets — including the Grok chatbot and underlying compute infrastructure — under the SpaceX corporate umbrella. The transaction effectively brings together SpaceX’s aerospace manufacturing and launch services, its Starlink satellite internet constellation, and xAI’s artificial intelligence research and data center operations. Reporting from Bloomberg indicates the combined valuation stands near $1.25 trillion, with SpaceX estimated at about $1 trillion and xAI at $250 billion.
SpaceX has not publicly released specific financial terms or agreement details. Reports indicate that xAI shareholders may receive SpaceX stock with a defined exchange ratio, and that cash alternatives may be offered. The companies have flagged that regulatory scrutiny could arise due to Musk’s leadership roles across multiple entities and SpaceX’s involvement in sensitive government contracts.
Strategic Objectives and Infrastructure Plans
The core rationale for the acquisition, as outlined in SpaceX’s announcement, centers on the limitations of terrestrial data centers for supporting future AI compute requirements. Musk’s memo, published on the SpaceX website, stated that current advances in AI depend heavily on large terrestrial data centers requiring significant power and cooling resources, and that global electricity demand for advanced AI workloads “simply cannot be met with terrestrial solutions” without imposing hardship on communities and the environment.
To address these constraints, SpaceX’s filings with the U.S. Federal Communications Commission propose deploying up to one million satellites configured as solar-powered compute platforms in low Earth orbit. These platforms would leverage optical intersatellite links and SpaceX’s Starship launch architecture to establish a large-scale orbital compute infrastructure.
According to SpaceX’s public materials, the plan is to use near-constant solar energy in space to power data centers that could offer significant compute capacity with reduced operating and maintenance costs compared with Earth-based facilities, which must contend with limited electricity availability and complex cooling requirements.
Background and Industry Context
SpaceX has built its business around launch services and the Starlink satellite internet constellation, which has deployed thousands of satellites into low Earth orbit. xAI, founded as an artificial intelligence research company, has developed AI models including the Grok language model and maintains substantial data center operations on Earth. The acquisition consolidates SpaceX’s aerospace capabilities with xAI’s compute and AI expertise.
The move reflects broader industry interest in addressing the energy and infrastructure demands associated with large-scale AI compute. Other technology firms are exploring space-based infrastructure; for example, Google has pursued solar power satellite concepts and related initiatives. The announcement by SpaceX frames orbital data centers as a response to the rapid growth in AI power requirements, positioning space-based compute as a distinct model within the evolving landscape of AI infrastructure development.
Regulatory and Operational Considerations
The combined SpaceX-xAI entity operates amid ongoing regulatory and legal scrutiny involving its AI technologies and social media platforms. Investigations into AI tool outputs and deepfake content have drawn attention in multiple jurisdictions, and the broader merger may attract review concerning governance and national security implications due to SpaceX’s defense contracts and Musk’s overlapping leadership roles.
SpaceX’s orbital data center plans will require coordination with national and international regulatory bodies for frequency allocation, orbital debris mitigation, and licensing of satellite operations. The Federal Communications Commission filings outlining the proposed satellite constellation include details on orbital altitudes and intersatellite communication technologies, indicating the technical groundwork for future deployments.
Conclusion
SpaceX’s acquisition of xAI represents a significant consolidation of artificial intelligence and space infrastructure capabilities. The corporate realignment integrates AI compute resources with launch and orbital systems, anchoring space-based data centers as a central objective of the combined company. The deal’s reported valuation near $1.25 trillion and potential public offering later in 2026 highlights its scale within the technology and aerospace sectors.
