Elon Musk has created the world’s most valuable private company by merging his artificial intelligence startup xAI into his rocket company, SpaceX. The combined companies are now valued at an estimated $1.25 trillion, making it the biggest merger in history. Musk controls both companies, giving him significant influence over the deal.
The connection between rockets and AI may seem tenuous at first, but it makes sense when considering Musk’s long-term goals. SpaceX has made a name for itself by building reusable rockets that deliver satellites into orbit at a low cost. The company also delivers people and cargo to the International Space Station on behalf of NASA, with 95% of America’s space launches being conducted by SpaceX. Meanwhile, xAI has been working on Large Language Models, including its core Grok model, which performs well in industry benchmarks. However, training these models is expensive due to the cost of electricity and data center space. Musk’s solution is to launch data centers into space, a concept that could benefit from free solar energy and reduced cooling costs.
This idea may seem like science fiction, but it could give xAI a significant advantage over its competitors, including OpenAI. By beaming data back to earth, a constellation of data center satellites could reduce the cost of training and operating Large Language Models. Musk may also find it easier to recruit talent for SpaceX and use government contracts for orbital launches to fund AI development. In the short term, Starlink customers may see more AI tools built into their Internet subscriptions, and Musk may plan to build more AI into his government contracts, including those in the defense space, potentially competing with companies like Palantir.
The deal is not yet officially complete, and regulators may still object to the creation of a mega company at Musk’s desired scale. Concerns about Musk’s control of both information and access to space could also pose a national security risk. However, if the merger goes ahead, Musk will have unprecedented control over two of the 21st century’s most promising technologies and the ability to combine them in innovative ways.
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