Elon Musk merges SpaceX with xAI to pioneer space-based AI data centres

495

Elon Musk’s aerospace firm SpaceX has acquired his artificial intelligence company xAI in a strategic move to accelerate the development of space-based AI data centres, according to an announcement on the SpaceX website. 

The merger, revealed on 3 February 2026, brings several of Musk’s major technology projects — including spaceflight, AI research, satellite internet via Starlink, and social media assets from xAI’s acquisition of X — into a single entity.  

Musk outlined the rationale: traditional Earth-based data centres require “immense amounts of power and cooling” that are unsustainable without significant environmental impact. In his view, placing data centres in space to harness abundant solar energy offers a long-term solution to the energy demands of artificial intelligence.  

“In the long term, space-based AI is obviously the only way to scale,” Musk wrote, predicting that within the next two to three years the lowest-cost method to generate AI computing will be in orbit, powered by the Sun.  

SpaceX’s Starship and Falcon launch systems will play a key role in deploying the infrastructure needed to support orbital data centres. Musk also reiterated ambitions to launch large numbers of satellites, potentially reaching into the hundreds of thousands or more.  

The merger comes as Musk prepares SpaceX for a potential initial public offering and competes with other tech companies exploring space-based solutions, including Jeff Bezos’s Blue Origin and Google’s Project Suncatcher.

Both SpaceX and xAI maintain major contracts with US government agencies, including NASA and the Department of Defense, reflecting the overlap between commercial and national interests in space and AI technologies.