Earlier this week, news emerged that SpaceX CEO Elon Musk was considering taking his private space company public on his birthday in June at a staggering valuation of $1.5 trillion, making it easily the largest IPO in history.
Now, as Reuters reports, Musk is hoping to go one step further, merging his AI startup xAI with SpaceX ahead of the IPO — a baffling plan that raises far more questions than answers.
For now, we have no idea why the deal is even on the table, let alone the financial specifics. The narrative will likely have something to do with SpaceX helping xAI launch data centers into Earth’s orbit — an idea that AI tech leaders have become obsessed with as of late, despite experts warning it makes little sense, citing concerns over economic viability and bandwidth limitations.
“The lowest cost place to put AI will be in space,” Musk said during an interview in Davos last week. “And that will be true within two years, maybe three at the latest.”
Other companies, most notably Jeff Bezos’ Blue Origin, are also looking to launch thousands of satellites that will ultimately serve data centers from space. Google CEO Sundar Pichai has also been infatuated by the idea, arguing that bringing data centers closer to the Sun could allow them to reap practically unlimited amounts of solar energy while in orbit.
According to Reuters, two entities in Nevada, including a limited liability company that lists SpaceX chief financial officer Bret Johnsen, have been set up to facilitate the swapping of xAI and SpaceX shares. A source told the news agency that xAI executives could receive cash instead of SpaceX stock as part of the deal.
SpaceX already agreed to invest $2 billion in xAI last year as part of the startup’s fundraising round. Both xAI and SpaceX have secured major defense contracts with the Pentagon. Just earlier this year, defense secretary Pete Hegseth revealed that Musk’s AI chatbot Grok will be operating inside Pentagon networks.
SpaceX is also developing a national security version of its Starlink broadband internet network, called Starshield, which is expected to use AI to track targets back on the surface, according to Reuters.
Musk is no stranger to merging his own businesses. Last year, for instance, he folded his social media echo chamber X into xAI. His embattled EV maker, Tesla, is also seemingly getting in on the fun, announcing that it had agreed to invest $2 billion in xAI earlier this week, after reporting some disastrous earnings.
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