Elon Musk weighs SpaceX–xAI merger ahead of 2026 IPO

American aerospace manufacturer SpaceX is reportedly looking to merge with xAI ahead of the planned public offering later this year. The initiative would combine Elon Musk’s rockets, Starlink satellites, the X social media platform, and the Grok AI chatbot. 

An individual briefed on the matter told Reuters that the combination of both firms would give fresh momentum to SpaceX’s effort to launch data centers into space. The merger also comes as Musk battles for supremacy in the artificial intelligence space against major tech giants, including OpenAI, Meta, and Google.

Musk sets up two entities in Nevada to facilitate merger transaction

🇺🇸 SPACEX + xAI MERGER TALKS HAPPENING

Elon’s looking to merge SpaceX with xAI ahead of a possible IPO.

This could give xAI access to SpaceX’s massive infrastructure and data power, and make the IPO even bigger.

If you thought Grok was just a chatbot, think bigger. Way bigger.… pic.twitter.com/rfj7DdDyxp

— Mario Nawfal (@MarioNawfal) January 29, 2026

According to a Reuters report, xAI shareholders would receive SpaceX shares in the proposed merger. He also disclosed that Musk has established two entities in Nevada to facilitate the transaction. However, the individual did not detail the deal’s value, its primary rationale, or its potential timing.

Corporate filings in Nevada show that Musk launched both entities on January 21. According to reports, one entity is a limited liability company, with SpaceX and its Chief Financial Officer, Bret Johnsen, listed as managing members. The other entity also lists Johnsen as its only officer. The corporate filings provided limited information about the entities’ purposes or roles in any deal.

The anonymous individual revealed that the deal offers some xAI executives the chance to receive cash instead of SpaceX shares. He also confirmed that no executive has reportedly signed any final agreement, and the timing and structure of the transaction remain fluid.

Cryptopolitan previously reported that SpaceX plans to raise more than $25 billion through an IPO later this year. The move will allegedly boost the aerospace manufacturer’s valuation to over $1 trillion. The firm is currently the world’s most valuable privately held company, with a valuation of about $800 billion. xAI’s valuation as of November is around $230 billion.

Musk also revealed plans to use xAI to establish a massive supercomputer for AI training in Memphis, Tennessee, called Colossus. The initiative follows SpaceX’s plan to invest $2 billion in xAI as part of the firm’s &$5 billion equity fundraising.

“The lowest cost place to put AI will be in space. And that will be true within two years, maybe three at the latest.”

-Elon Musk, Co-Founder and CEO of SpaceX.

Musk aims to leverage solar energy to power space-based AI processing, thereby mitigating the cost of generating the computing power needed to train AI models. Other firms are working on the same technology, with Blue Origin revealing a new high-capacity satellite backbone network. Google is also looking to establish space-based data centers with its Project Suncatcher.

SpaceX and xAI merger advances footing for defense contracts with the Pentagon 

Caleb Henry from space research firm Quilty Analytics argued that combining SpaceX and xAI could advance the company’s footing for major defence contracts at the Pentagon. The Pentagon has been actively adopting AI across its military networks, already having a $200 million contract with xAI to provide Grok products.

U.S. Defense Secretary Peter Hegseth visited SpaceX‘s Starbase development site in Texas earlier this month, where he championed xAI’s language model and chatbot, Grok. He argued that the chat platform and the LLM will be integrated into military networks as part of the Pentagon’s AI acceleration strategy. The strategy aims to speed up the U.S. military’s decision-making and planning.

Musk previously combined the social media platform X with xAI in a share swap last year. The initiative gave the AI startup access to X’s data and distribution. The techpreneur also used Tesla shares in 2016 to purchase his solar energy company, SolarCity. Musk’s electric vehicle manufacturer revealed on Wednesday plans to invest approximately $2 billion in xAI.

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