Finance
SpaceX in merger talks with other Musk companies ahead of IPO
Published by Global Banking & Finance Review®
Posted on January 29, 2026
6 min readLast updated: January 30, 2026
Global Banking & Finance Review®
Company
Published by Global Banking & Finance Review®
Posted on January 29, 2026
6 min readLast updated: January 30, 2026
SpaceX and xAI are in merger talks ahead of a planned IPO, aiming to integrate AI and space technologies under Elon Musk's leadership.
By Echo Wang and Joey Roulette
NEW YORK, Jan 29 (Reuters) - SpaceX is exploring deals with other companies helmed by serial entrepreneur Elon Musk, leaving investors working through permutations between space, autonomous driving and artificial intelligence to analyze which combination makes the most sense.
The rocket maker is in discussions to merge with xAI ahead of a blockbuster public offering planned for this year, Reuters reported on Thursday. The combination would bring Musk’s rockets, Starlink satellites, X social media platform and Grok chatbot under one roof, according to a person briefed on the matter and two regulatory filings.
Reuters could not determine the deal's value, timing or primary rationale.
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.
Musk, the world's richest man, is CEO of SpaceX and artificial intelligence company xAI, which controls X. He also runs Tesla, tunnel company The Boring Co and neurotechnology firm Neuralink.
"What's important for Elon is to have a massive vision that's way out there that he's early on," Munster said. A compelling prospect would be Tesla taking xAI which would improve the EV maker's robot and self-driving car plans, he said.
Predictions hub Polymarket late on Thursday put the chance of a SpaceX-xAI merger by mid-year at 48% and Tesla-xAI merger at 16%.
Musk, SpaceX, xAI and Tesla did not respond to requests for comment. Tesla's share price rose 3% in after-hours trade.
SpaceX plans to go public some time this year with a valuation likely above $1 trillion, Reuters and other media reported. It is the world's most-valuable privately held company - at $800 billion in a recent private share sale. xAI was valued at $230 billion in November, the Wall Street Journal reported. Tesla's market capitalization is $1.4 trillion.
For SpaceX, a massive deal may complicate its IPO but add momentum to efforts to launch data centers into orbit, a key goal in the escalating AI race against the likes of OpenAI, Meta Platforms and Alphabet's Google.
Some Tesla shareholders have long advocated bringing Musk's companies together. Bloomberg reported that investors have been pushing the idea of joining SpaceX and Tesla.
"Musk has too many separate companies," said Dennis Dick, chief market strategist at Stock Trader Network. "A major risk thesis for Tesla is that Musk is spreading himself out too much. As a Tesla shareholder, I applaud further consolidation."
Under a SpaceX-xAI merger, xAI shares would be exchanged for SpaceX shares. Two entities have been established in Nevada to facilitate, said the person briefed on the matter, requesting anonymity because discussions are confidential.
Filings showed those entities were set up on January 21 but did not detail their purpose or role in any deal. One lists SpaceX and its chief financial officer, Bret Johnsen, as managing members. The other lists Johnsen as sole officer.
Johnsen did not respond to a request for comment.
Some xAI executives could be given the option to receive cash instead of SpaceX stock as part of the deal, said the person briefed on the matter. No final agreement has been signed and the deal timing and structure remain fluid, the person said.
DATA CENTERS IN SPACE
Space-based AI processing, powered by solar energy, is aimed at cutting the cost of generating the computing power that runs and trains AI models such as xAI's Grok. Billionaire Jeff Bezos' Blue Origin has announced a high-capacity backbone network of thousands of satellites, while Google is researching space-based data centers under Project Suncatcher.
Speaking in Davos, Switzerland, last week, Musk - whose timing projections are rarely realized - said "the lowest cost place to put AI will be in space. And that will be true within two years, maybe three at the latest."
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.
Folding in xAI could also boost SpaceX's prospects for contracts at the Pentagon, which has sought to ramp up AI adoption in military networks, said Caleb Henry of space research and advisory Quilty Analytics.
U.S. Defense Secretary Pete Hegseth this month visited SpaceX's Starbase development site in Texas where he said xAI's language model and chat platform Grok will be integrated into military networks as part of an "AI acceleration strategy" aimed at speeding up military decision-making and planning.
xAI has a contract worth as much as $200 million to provide Grok products to the Pentagon. Through xAI, Musk is building out a supercomputer for AI training in Memphis, Tennessee, called Colossus.
Starlink and national security variant Starshield already rely heavily on AI, such as for automated satellite maneuvers in orbit. Starshield, under a contract with a U.S. intelligence agency, is building a network of hundreds of classified satellites equipped with sensors that are widely expected to use AI to help track moving targets on Earth.
LATEST MERGER BETWEEN MUSK COMPANIES
Musk already has been combining businesses. In 2016, he used Tesla stock to buy solar-energy company SolarCity. Last year, he folded X into xAI in a share swap that gave the AI startup access to the microblog's data and distribution.
xAI also received a $2 billion investment commitment from SpaceX as part a $5 billion equity fundraising, the Wall Street Journal reported last year.
This month, xAI raised $20 billion in an upsized Series E funding round, exceeding its $15 billion target at a valuation of $230 billion. It also gained a commitment of about $2 billion from Tesla on Wednesday.
Ross Gerber, CEO of Tesla and xAI investor Gerber Kawasaki Wealth and Investment Management, said he could envision a marriage of Musk businesses.
"It's like a bunch of overvalued companies merging together into one big overvalued mess run by Elon. But it's a pure play now. It's like, you want to invest in Elon? Here you go. Like, you get all this. And it's much more attractive, actually, as an investment."
(Reporting by Echo Wang and Joey Roulette; Additional reporting by Milanna Vinn, Sabrina Valle, David Jeans and Abhirup Roy; Editing by Paritosh Bansal, Peter Henderson and Christopher Cushing)
A merger is a business strategy where two companies combine to form a single entity, often to enhance competitiveness, increase market share, or achieve operational efficiencies.
Artificial intelligence (AI) refers to the simulation of human intelligence in machines programmed to think and learn, enabling them to perform tasks that typically require human intelligence.
Valuations in finance refer to the process of determining the current worth of an asset or company, often using various methods such as discounted cash flow analysis or market comparisons.
A public offering is the process by which a company sells its shares to the public for the first time, allowing it to raise capital from a wide range of investors.
A data center is a facility used to house computer systems and associated components, such as telecommunications and storage systems, essential for managing and processing data.
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