Elon Musk’s aerospace company SpaceX has acquired his artificial intelligence startup xAI in a landmark deal valued at $1.25 trillion, making it the largest merger in history. The transaction, confirmed by CNBC’s David Faber, combines SpaceX, currently valued at $1 trillion, with xAI, valued at $250 billion, according to internal documents reviewed by the network. Musk announced the merger in a blog post, positioning it as a strategic move to create what he described as “the most ambitious, vertically-integrated innovation engine on (and off) Earth,” integrating AI, rocket technology, space-based internet, and his social media platform X. The primary driver behind the merger is the development of orbital data centers—satellite-based computing infrastructure that would leverage SpaceX’s Starlink satellite network and xAI’s advanced AI capabilities. Musk emphasized that placing AI computing systems in space could enable faster, more scalable, and more resilient data processing, particularly for real-time AI applications. This integration aims to combine SpaceX’s expertise in launching and operating satellites with xAI’s cutting-edge AI research, creating a powerful synergy between space infrastructure and artificial intelligence. The deal is structured as a share exchange, with one share of xAI being converted into 0.1433 shares of SpaceX stock. According to the documents, xAI is priced at $75.46 per share, while SpaceX trades at $526.59 per share. Valuation reports from banks show a wide range for the companies, with SpaceX estimated between $859 billion and $1.26 trillion, and xAI between $219 billion and $294 billion. These figures reflect investor confidence in Musk’s vision and the potential of a unified space-AI ecosystem. The merger comes ahead of SpaceX’s highly anticipated initial public offering (IPO), which could raise up to $50 billion and value the company as high as $1.5 trillion. The IPO is expected later this year and would be one of the most significant tech listings in history. The xAI acquisition adds momentum to this effort, signaling a bold new phase for Musk’s business empire. This move also reflects a broader trend of convergence between AI and space technology. By integrating AI into satellite networks, companies could enable real-time data processing for global communications, climate monitoring, navigation, and more. Musk has long advocated for the idea of space-based computing, and this merger brings that vision closer to reality. The acquisition has drawn attention from investors, analysts, and tech observers, who see it as a transformative step in both AI and space exploration. While the merger is unprecedented in scale, it also raises questions about regulatory scrutiny, market concentration, and the long-term viability of such a vertically integrated model. Despite the challenges, Musk remains confident in the future of the combined entity. He views the merger not just as a financial transaction, but as a foundational step toward building a self-sustaining technological infrastructure that spans Earth and space. The integration of AI, rockets, internet, and social media under one umbrella could redefine how technology is developed and deployed in the coming decades. As SpaceX prepares for its IPO and xAI becomes a core part of its operations, the world will be watching to see whether this $1.25 trillion merger delivers on its promise of revolutionizing both space and artificial intelligence.