☕ SpaceX just ate xAI. Now it's worth $1.25 trillion.

Hey everyone,

Happy Thursday. ☕

I have to be honest with you,

I've been waiting to write this one.

What happened Monday wasn't just a merger. It was Elon Musk doing in public what he's been doing in private for years: collapsing everything into one stack. SpaceX swallowed xAI, and overnight, the world's most valuable private company also became one of the most powerful AI companies on the planet.

⏱️ Read time: 4 minutes

Let's get into it.

SpaceX acquired xAI on February 2nd. The tie-up values the combined company at $1.25 trillion, making it the most valuable private company in the world. Musk called it "the most ambitious, vertically-integrated innovation engine on (and off) Earth, with AI, rockets, space-based internet" and the X social media platform.

One person.

One company.

Rockets, AI, satellites, social media, and data centers.

All under one roof.

Most mergers are about cost-cutting or market share. This one is about something different. It's about owning the entire stack.

Here's what Musk built before this deal even closed:

SpaceX owns the rockets. It owns Starlink (9 million subscribers, 9,000+ satellites). It dominates orbital launch with more flights than every other country combined.

xAI owns Grok, the AI model. It owns massive GPU training infrastructure. It owns the data pipeline through X (formerly Twitter).

Now they're one company. And that changes everything.

Most AI companies are completely dependent on someone else for their compute. They rent servers from AWS. They buy GPUs from Nvidia. They pray their cloud provider doesn't raise prices or get hacked.

Musk just said: "We don't rent. We build."

This is where it gets wild.

Musk is framing the deal as part of a strategic futuristic plan to put data centers in space. He wrote that "within 2 to 3 years, the lowest cost way to generate AI compute will be in space."

Think about that for a second. Right now, AI data centers eat electricity like crazy. They need massive cooling. They strain local power grids. Communities push back. Regulators circle.

Musk wrote: "Current advances in AI are dependent on large terrestrial data centers, which require immense amounts of power and cooling. Global electricity demand for AI simply cannot be met with terrestrial solutions, even in the near term, without imposing hardship on communities and the environment."

Space-based data centers powered by direct sunlight? Zero cooling costs. Zero community opposition. Unlimited solar energy.

It sounds like science fiction. But SpaceX has the rockets to make it real. And now it has the AI team to build what goes inside them.

SpaceX is seeking regulatory approval to launch up to one million satellites as part of its long-term plans.

One. Million. Satellites.

Here's what you're actually looking at:

$1.25 trillion — Combined valuation after merger

$8 billion — SpaceX's estimated profit on $15-16 billion of revenue in 2025

$1 billion/month — xAI's current burn rate

$1.5 trillion — Rumored IPO valuation (before the merger made it bigger)

9 million — Starlink subscribers generating recurring revenue

170+ — Orbital launches SpaceX completed in 2025

The math is brutal but clear: SpaceX is profitable and cash-rich. xAI is burning cash but building the future. Together, SpaceX funds xAI's ambitions while xAI gives SpaceX an AI brain. It's a perfect marriage of money and moonshots.

Let's be straight with you. This merger changes the SpaceX IPO story completely.

Before Monday, you were buying a rocket company with a satellite internet business. Now? You're buying a rocket company, a satellite internet business, AND an AI lab, AND a social media platform, AND a future space-based data center empire.

That's a completely different valuation conversation.

SpaceX has been reportedly preparing an IPO for as early as June of this year. It's unclear whether the merger will affect that timeline.

If the IPO still happens in June, the pricing will be fascinating. Public markets love AI narratives right now. Slapping "AI + rockets + space data centers" on one ticker symbol? That's the kind of story that makes investors lose their minds—in a good way.

Here's what we're watching: How does this affect the secondary market? SpaceX shares were already trading well above the $800B tender price. A $1.25 trillion combined valuation with an AI story attached? Expect those secondaries to go even crazier..

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This empire is built by one person. And that person is spread impossibly thin.

Musk is also the head of Tesla, The Boring Company, and Neuralink. He's running a government efficiency advisory role. He's in a legal battle with OpenAI. He's building rockets to Mars.

A former xAI staffer noted: "xAI prides itself on 'move fast and break things,' flat hierarchy, act first ask questions later... I have a hunch many xAI people will hit culture shock with SpaceX."

Culture clashes kill mergers. Distracted founders kill companies. And xAI has already faced regulatory probes in multiple jurisdictions internationally, after its Grok AI tools enabled users to generate and share sexualized images of children and non-consensual intimate images of adults.

This is the single biggest risk in the entire thesis. The empire is incredible. But empires built by one man are fragile.

Here's what I keep coming back to: Elon Musk isn't playing the AI game the way everyone else is.

OpenAI is raising $100 billion to rent more GPUs. Google is throwing money at TPUs. Meta is building data centers that strain the Mississippi River's water supply.

Musk looked at all of that and said: "I'll own the rockets, the satellites, the AI, the social network, and eventually the data centers in space."

It's either the most insane vertical integration play in the history of technology, or it's the smartest. Probably both.

The Google investment in SpaceX back in 2015 turned a $1 billion bet into billions of dollars in returns—because someone committed to the vision before the outcome was visible. We might be looking at that same moment again. Except this time, the vision is bigger.