Elon Musk has recently merged his rocket company, SpaceX, with his AI startup, xAI, in a major deal that will extend “the light of consciousness to the stars,” according to the billionaire.
Elon Musk has recently merged SpaceX, his rocket company, with xAI, his AI startup, in a huge business deal. Musk described this merger as a means of extending “the light of consciousness to the stars.”
The transaction, according to reports, has now created a business worth $1.25 trillion after combining the rocket company and artificial intelligence startup; valuing SpaceX at $1 trillion and xAI at $250 billion.
A key part of this deal for Musk was to move data centers, which are the central nervous system of AI tools, into space. AI companies are currently “too dependent” on earth-bound data centers that have a large demand for energy. So for him, moving upwards of a million satellites into orbit to form solar-powered centers is the solution.
Professors Julie McCann and Matthew Santer, the co-directors of the school of convergence science in space, security, and telecoms at Imperial College London, stated that solar-powered data centers could be a major option for AI companies in the near future, according to the Guardian.
“There are limits to how much compute power can be mustered by current satellites, so it would need a planet-wide distributed computer composed of many satellites – as envisioned by Musk.”
There are other problems that need to be addressed as well, McCann and Santer said, such as solar radiation and maintenance.
“Data centers on earth are constantly maintained – component failure is normal. Shipping components to space is complex and expensive, and you would have to be innovative regarding how components are fitted.”
Musk has stated that these data centers add 100 gigawatts of AI capacity annually, with the current capacity globally being around 59 GW.
In a message to employees, Musk said that this merger “would create the most ambitious vertically integrated innovation engine on (and off) Earth.”
“This merger is aimed at creating a new path to generate a low cost of generating AI compute within the next two to three years by bringing together the top internet/space exploration company with top data center builders,” said Dan Ives, an analyst at the US financial services company Wedbush Securities.
According to Tesla and SpaceX investor, Ross Gerber, by combining SpaceX with the AI startup, xAI will have better access to cash and investors like companies Meta, Amazon, Microsoft, and Google.
“Musk is already running low on capital for xAI and it is competing with companies putting hundreds of billions of dollars into their AI investments,” he said.
“If you merge SpaceX and xAI you can support xAi because SpaceX is an extremely attractive prospect to a lot of investors.”
Michael Sobel, the president and co-founder of Scenic Management which buys secondary stakes in privately held companies and has invested in the AI company Anthropic, said that the addition of xAI adds “narrative complexity to the SpaceX story.”
“By folding in xAI, which carries a significant monthly cash burn, you change the financial profile of the company overnight. In the secondary market, ‘simple’ is usually rewarded. This merger requires investors to do a lot more homework on how xAI’s cash burn impacts SpaceX’s overall valuation and IPO timeline,” Sobel stated.
“For a long-term investor, this secures the most advanced AI ‘brain’ for the most advanced hardware ‘body’ in existence. The upside is a $1.25tn entity that controls the entire stack, from the launchpad to the neural network.”
Gerber, who invested in Musk’s buyout of X back in 2022 when the platform was known as Twitter, said that he welcomes this merger. X utilizes Grok, an AI tool on the platform for users.
“For me as a Twitter shareholder, I could not be happier. I pretty much figured I had lost my money but that has now been parlayed into owning SpaceX shares. It’s awesome for me but if I was a SpaceX shareholder I would be pissed.”
“Musk wants to own and control more of the AI ecosystem and step by step the holy grail could be combining SpaceX and Tesla,” Ives said.
Eric Mastrota is a Contributing Editor at The National Digest based in New York. A graduate of SUNY New Paltz, he reports on world news, culture, and lifestyle. You can reach him at eric.mastrota@thenationaldigest.com.
