Elon Musk’s SpaceX and xAI explore merger for space-based AI

The deal would unite SpaceX’s reusable rockets, Starlink internet satellites, the X platform and the AI chatbot Grok

There has been a recent increase in Grok deepfakes (Alamy/PA) (Alamy/PA)

Two of Elon Musk’s companies are reportedly exploring a potential merger, which could see his rocket company SpaceX tie-up with his AI startup xAI.

The deal is being discussed ahead of a planned public offering in June, according to two regulatory filings seen by Reuters.

The combined entity would unite SpaceX’s reusable rockets, Starlink internet satellites, the X platform and the AI chatbot Grok. It could also see Musk achieve his ambition of building space-based AI data centres, which he claims will be possible in two to three years.

Speaking at the World Economic Forum in Davos last week, Musk said that space-based AI would be more vastly more efficient than terrestrial setups.

“When you have solar in space you get five times more effectiveness, maybe even more than that, than solar on the ground,” he said.

“It’s always sunny, so you don’t have a day-night cycle or seasonality or weather and you get about 30 per cent more power in space because you don’t have atmospheric attenuation of the power. The net effect is any given solar panel will do five times more energy in space than on the ground.”

Building data centers in space is a risky proposition considering AI is evolving rapidly and unpredictably. Analysts and executives have questioned whether envisioned cuts in energy consumption are worth the cost of tailoring systems for space.

As well as being the head of SpaceX and xAI, Musk, the world's richest person, also runs Tesla, tunnel company The Boring Co and neurotechnology firm Neuralink.

SpaceX is also considering a merger with Musk's electric vehicle maker Tesla, Bloomberg reported.

"I think it's highly likely that (xAI) ends up with one of the two parties," said Tesla shareholder Gene Munster, who is managing partner at xAI investor Deepwater Asset Management.

"What's important for Elon is to have a massive vision that's way out there that he's early on.”

Predictions hub Polymarket late on Thursday put the chance of a SpaceX-xAI merger by mid-year at 48 per cent and Tesla-xAI merger at 16 per cent.

Musk, SpaceX, xAI and Tesla did not respond to requests for comment. Tesla's share price rose 3 per cent in after-hours trade.

SpaceX’s initial public offering (IPO) later this year will likely be the biggest in history, reaching a potential valuation above $1 trillion.

Additional reporting from agencies.