What happened
Elon Musk announced the merger of SpaceX and xAI on 3 February 2026, creating a combined entity valued at approximately $1.25 trillion. This consolidation integrates SpaceX's launch and satellite capabilities with xAI's advanced AI research, aiming to develop orbital data centres and a full-stack AI infrastructure. The merger provides xAI access to SpaceX's cash flow for infrastructure buildout, addressing terrestrial data centre limitations and disrupting cloud computing and satellite connectivity markets.
Why it matters
This merger introduces tightened dependencies between space infrastructure and AI development, increasing exposure for platform operators reliant on either entity's services due to consolidated risk. It raises the oversight burden for compliance and procurement teams to assess the integrated supply chain and regulatory implications of orbital AI data centres. Furthermore, it reduces visibility into the financial and operational autonomy of xAI, requiring enhanced due diligence from investment analysts.
