Elon Musk's SpaceX buys Elon Musk's xAI

SpaceX has announced it has acquired artificial intelligence start-up xAI in a deal that that brings together two companies owned by Elon Musk.

In a statement, Mr Musk said the deal would create "the most ambitious, vertically-integrated innovation engine on (and off) Earth, with AI, rockets, space-based internet, direct-to-mobile device communications and the world's foremost real-time information and free speech platform".

The world's richest man, who also owns Tesla, social media platform X, and satellite communications company Starlink, said the combination would aim to develop AI data centres in space, and called the move "not just the next chapter, but the next book in SpaceX and xAI's mission".

X, formerly Twitter, was itself bought by xAI last year. Mr Musk bought Twitter in 2022 for $44bn (£38bn).

Of the latest deal, Mr Musk wrote: "In the long term, space-based AI is obviously the only way to scale.

"The only logical solution therefore is to transport these resource-intensive efforts to a location with vast power and space. I mean, space is called 'space' for a reason.

"By directly harnessing near-constant solar power with little operating or maintenance costs, these satellites will transform our ability to scale compute.

The combined company would have a valuation of $1.25trn (£910bn), according to Bloomberg, and the deal comes ahead of SpaceX's anticipated initial public offering, expected to be announced later this year.

Image: SpaceX's mega rocket Starship blasts off for a test flight from Starbase, Texas, in October 2025. Pic: AP

SpaceX are not the only company to explore the idea of putting AI data centres in space.

Google last year revealed a new research project called Project Suncatcher that would equip solar-powered satellites with AI computer chips.

Mississippi officials last month announced that xAI is set to spend $20bn (£14.6bn) to build a data centre near the state's border with Tennessee.

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SpaceX's acquisition of xAI comes weeks after X came under fire following complaints that users were using the platform's AI chatbot, Grok, to make sexualised photos of real women and children

It prompted an investigation by the UK's independent online safety watchdog, Ofcom, and calls from Prime Minister Sir Keir Starmer for the platform to comply with UK laws "immediately".

The company has since announced the AI tool will no longer be able to undress pictures of real people.

"We have implemented technological measures to prevent the Grok account from allowing the editing of images of real people in revealing clothing such as bikinis," X previously said in a statement.

"This restriction applies to all users, including paid subscribers."