SpaceX-xAI Merger Reshapes Musk’s Empire, Tesla’s Role in Question

A sweeping deal has seen SpaceX acquire Elon Musk’s artificial intelligence company, xAI, creating a combined entity valued at $1.25 trillion. This move significantly alters the landscape of Musk’s business holdings and raises critical questions about the future of Tesla, which recently invested $2 billion in xAI.

The Mega-Deal: SpaceX and xAI Unite

SpaceX announced the acquisition of xAI on February 2, 2026, forging what Musk describes as “the most ambitious, vertically-integrated innovation engine on (and off) Earth.” The newly formed company will focus on AI, rockets, space-based internet, direct-to-mobile device communications, and a free speech platform. SpaceX, last valued at approximately $800 billion, combined with xAI’s $230 billion valuation (following a recent $20 billion funding round), results in the $1.25 trillion entity.

An initial public offering (IPO) is planned for later this year, potentially raising up to $50 billion, according to Wall Street rumors. A key component of Musk’s vision is the development of “orbital data centers”—a constellation of up to one million AI satellites powered by solar energy in space to facilitate AI computing. SpaceX has already filed with the Federal Communications Commission (FCC) for authorization to launch these satellites. Musk believes that space-based computing will turn into the most cost-effective method for AI processing within 2 to 3 years.

What Does This Mean for Tesla?

The acquisition leaves Tesla’s recent $2 billion investment in xAI as an indirect stake in the combined SpaceX-xAI entity. Effectively, Tesla shareholders now hold a tiny ownership position in SpaceX through this investment. The deal underscores a clear distinction: Tesla is not currently integrated into Musk’s broader “Musk Inc.” vision.

Consolidation of Musk’s Businesses

This merger follows a pattern of consolidation within Musk’s companies. Last year, xAI acquired X (formerly Twitter) for $45 billion, including $12 billion in debt. However, Musk has also demonstrated a willingness to spin out ventures, such as The Boring Company from SpaceX in 2018. He continues to lead Neuralink, his brain implant company, as a separate entity.

Investor Sentiment and Potential for a Tesla-SpaceX Merger

The market is reacting to the news with increased speculation about further consolidation. A Polymarket contract indicates a 24% probability of a Tesla-SpaceX merger being announced before June 30, up from the mid-teens prior to the xAI acquisition.

Following the xAI acquisition, SpaceX’s valuation of $1.25 trillion is now just 26% below Tesla’s current market capitalization. This shift means that, on paper, Musk’s net worth is now more closely tied to SpaceX than to Tesla.