Which company announced in February 2026 its plan to acquire xAI, valuing the combined entity at approximately $1.25 trillion?

In February 2026, SpaceX announced its acquisition of xAI, an artificial intelligence company also founded by Elon Musk. This significant move brought together two of Musk's key ventures, valuing the combined entity at approximately $1.25 trillion. The merger was an all-stock transaction, with xAI becoming a wholly owned subsidiary of SpaceX.

The strategic rationale behind this acquisition centers on a bold vision to integrate AI development with space-based infrastructure. A primary goal is to establish AI data centers in space, leveraging SpaceX's Starlink satellite network (Review) and launch capabilities. This approach aims to circumvent the substantial energy, cooling, and land-use limitations faced by large terrestrial AI data centers, potentially enabling more scalable and efficient AI operations.

By combining xAI's artificial intelligence expertise, including its Grok chatbot, with SpaceX's advancements in rockets and satellite internet, the newly formed entity seeks to create a vertically integrated innovation engine. This integration is designed to accelerate breakthroughs in AI by utilizing the unique environment of space for compute power. The merger also set the stage for SpaceX's anticipated initial public offering, with the combined valuation playing a crucial role in its market debut.