New York, February 3, 2026, 08:26 (EST) — Premarket
- SpaceX announced the acquisition of xAI, placing the combined entity’s valuation near $1.25 trillion
- After the announcement, U.S.-listed space stocks climbed in premarket trading
- Attention turns to SpaceX’s IPO timing amid regulatory concerns over data, satellites, and contracts
SpaceX has snapped up Elon Musk’s AI startup xAI, merging its rocket and satellite operations with the creators of the Grok chatbot. A source close to the deal pegged SpaceX’s valuation at $1 trillion and xAI’s at $250 billion—up from recent secondary-market estimates around $800 billion and $230 billion, respectively. xAI investors will get 0.1433 SpaceX shares per xAI share, the source added, with some execs able to cash out at $75.46 per share. PitchBook analyst Ali Javaheri highlighted Starlink as a “cash flow engine” amid LSEG data showing this is now the biggest M&A deal ever, beating Vodafone’s 2000 Mannesmann acquisition. Reuters
Data centers, those server warehouses behind AI model training and operation, are driving up electricity and water use for cooling. In a recent filing with the Federal Communications Commission, SpaceX requested permission to launch as many as 1 million solar-powered satellites aimed at running data centers in orbit. SpaceX already holds approval for 42,000 satellites supporting its broadband service, with roughly 9,500 currently in orbit. Satellite operators typically request far more satellites than they actually deploy. Reuters
U.S.-listed space stocks jumped in early trading after Elon Musk claimed “AI compute” — the processing power behind training and running AI models — might become cheaper in orbit within two to three years. Rocket Lab and Planet Labs shares climbed about 3%. AST SpaceMobile and Globalstar added 2.4% and 1.3%, respectively. Intuitive Machines gained 2.1%, while Redwire surged 4.9%. Musk linked this bet to the pursuit of AGI, or artificial general intelligence—a still-hypothetical milestone where machines could rival or surpass human cognition. AJ Bell’s Russ Mould said the merger could “whet the appetite,” and Seraphim Space CEO Mark Boggett called it the “strongest validation” yet for space-backed AI. Reuters
The merger puts the spotlight back on SpaceX’s much-anticipated IPO, set for later this year. Sources say the public debut could happen as soon as June, potentially valuing the company above $1.5 trillion. Should the offering exceed $25.6 billion, it would surpass Saudi Aramco’s 2019 record, according to IPO tracker Renaissance Capital. Reuters
xAI announced on its website Monday that it is now part of SpaceX, directing readers to a SpaceX site update. The post didn’t disclose any financial details or deal paperwork. x.ai
SpaceX is selling this combo as a way to link launch capacity, satellite broadband, direct-to-mobile connections, and a real-time info platform, with xAI’s models layered on top. This move puts it squarely against AI heavyweights like Google, Meta, OpenAI, and Anthropic, which has Amazon backing.
Musk has been consolidating his businesses. Last year, he merged the social media platform X into xAI via a share swap. Back in 2016, Tesla acquired solar installer SolarCity using its stock.
However, the deal raises questions about governance and pricing, given that Musk controls both sides and his companies overlap in staff, suppliers, and data. SpaceX, a key U.S. government contractor with projects for NASA and the Department of Defense, faces reviews linked to national security that could delay the transaction or impose conditions.
Regulatory scrutiny is mounting on Grok. The UK’s privacy regulator, the Information Commissioner’s Office, confirmed it has launched a formal investigation into Grok’s handling of personal data and concerns over harmful sexualised content. Meanwhile, Ofcom announced it will press ahead with its investigation into X. Reuters
Traders are eyeing if the early gains in space stocks stick once the market opens. Investors also want clearer timelines for an IPO filing and roadshow possibly kicking off in June. A telecom regulator’s ruling on the planned orbital data-center constellation looms as a key event. At the same time, any updates on how the merged firm plans to manage conflicts and customer data will be closely monitored.
