SpaceX is holding talks about a potential merger with xAI ahead of its planned initial public offering, according to people familiar with the matter cited by Reuters. The discussions underscore Elon Musk’s ambition to combine two of his most strategically important ventures into a single platform before taking it public.
If completed, the transaction would significantly reshape the structure of SpaceX’s IPO, which is already expected to be the largest in history. The merger could dramatically increase the company’s valuation and further consolidate Musk’s control over a business spanning space, communications, and artificial intelligence.
Why SpaceX is considering a merger with xAI
The talks reflect growing convergence between SpaceX’s satellite infrastructure and xAI’s artificial intelligence ambitions. SpaceX operates Starlink, the world’s largest satellite internet network, which generates vast amounts of data and provides global connectivity – a valuable asset for training and deploying advanced AI systems.
As previously covered, Musk has repeatedly emphasized that future technological leadership will be defined by the integration of AI with physical infrastructure. Folding xAI into SpaceX could create a vertically integrated company combining launch services, satellite communications, data generation, and AI model development under one corporate umbrella.
Sources say the discussions remain preliminary, and there is no certainty a deal will be finalized. However, the timing ahead of a public listing suggests a strategic effort to present investors with a broader and more ambitious growth narrative.
What it means for the IPO and Musk’s wealth
SpaceX is widely expected to pursue an IPO in the second half of 2026, with private market estimates already placing its valuation near $1.5 trillion. A merger with xAI could push that figure significantly higher, potentially cementing the offering as the largest IPO ever conducted.
For Musk personally, the implications are substantial. Analysts say combining SpaceX and xAI would concentrate ownership of two high-growth assets into a single publicly traded entity, potentially doubling his net worth if markets assign premium valuations to the merged business.
From an investor perspective, the deal could redefine how SpaceX is valued. Rather than being seen primarily as a launch and satellite company, the merged entity could be framed as a hybrid space-and-AI platform, competing not only with aerospace firms but also with leading technology and artificial intelligence companies.
At the same time, the move carries risks. Integrating two capital-intensive businesses with distinct cost structures and regulatory challenges could complicate financial disclosures and governance ahead of an IPO. Investors may also question whether the combined entity can deliver profitability at scale while sustaining massive investment requirements.
Still, the talks signal Musk’s willingness to pursue bold structural changes to maximize long-term value. If the merger proceeds, it would mark one of the most consequential corporate combinations in modern tech history and set the stage for an IPO that could redefine global equity markets.