Report: SpaceX is in deep negotiations with xAI for a merger, with an announcement of the agreement possible as early as this week

Elon Musk's Space Exploration Technologies Corp (SpaceX) is in deep negotiations for a merger with the artificial intelligence company xAI, marking the latest move in the acceleration of its business empire's integration.

On Monday local time, Bloomberg cited informed sources reporting that the two companies have disclosed the plan to some investors. Some insiders indicated that the agreement could be announced as early as this week. Discussions are ongoing, and negotiations may take longer or ultimately break down.

If the merger is completed, Musk's rocket business, Starlink satellite network, social media platform X, and Grok AI chatbot will all be integrated under the same corporate structure.

According to a previous report by Reuters, in the proposed merger plan, xAI's shares will be exchanged for SpaceX shares. Insiders stated that two entities have been established in Nevada to facilitate the deal. Nevada corporate filing documents show that both entities were formed on January 21. One is a limited liability company, listing SpaceX and its CFO Bret Johnsen as managing members; the other lists only Johnsen as the sole executive.

As part of the deal, some xAI executives may be allowed to choose cash instead of SpaceX stock. However, Reuters reported that a final agreement has not yet been signed, and the timing and structure of the deal remain uncertain.

Multiple Merger Plans Progressing Simultaneously

SpaceX has discussed the feasibility of merging with Tesla, a notion driven by some investors. Some insiders noted that any deal could attract strong interest from infrastructure funds and Middle Eastern sovereign wealth funds; one individual also indicated that the related transaction may require substantial financing.

One of Musk's grand visions for SpaceX is to send data centers into space to perform complex computational tasks for AI. Different merger plans may serve different aspects of this vision.

If the relevant engineering challenges can be solved, xAI is expected to gain significant benefits from the computing power provided by SpaceX's in-orbit data centers. Meanwhile, Tesla's manufacturing capabilities in energy storage systems could help SpaceX utilize solar power to supply these data centers in space.

Through xAI, Musk is building a large supercomputer named "Colossus" in Memphis, Tennessee, for AI training. Last year, SpaceX agreed to invest $2 billion in xAI, part of the startup's $5 billion equity financing. Musk stated last week in Davos, Switzerland, "Putting AI in space will be the lowest-cost solution, and it will become a reality within two years, at the latest three."

SpaceX's IPO Plans and Valuation

SpaceX is currently the highest-valued private company in the world, with a valuation of $800 billion in the most recent internal share transaction. According to previous media reports, the valuation is expected to exceed $1 trillion. SpaceX is considering going public around June, possibly close to Musk's birthday, with a financing scale of up to $50 billion. This would make it the largest IPO in history SpaceX has arranged investment banks for its IPO, with Bank of America, Goldman Sachs, JP Morgan, and Morgan Stanley expected to play significant roles in the underwriting. Robinhood is striving to play a key role in this heavyweight IPO of SpaceX.

Earlier this month, xAI raised $20 billion in an oversubscribed Series E funding round, exceeding the original target of $15 billion, with a valuation of $230 billion. Tesla announced on Wednesday that it agreed to invest approximately $2 billion in xAI. This is not the first time Musk has integrated companies he controls. In 2025, he incorporated the social media platform X into xAI through a stock swap, allowing the AI startup to access platform data and distribution channels