Elon Musk’s SpaceX and xAI are reportedly holding merger talks

Two Elon Musk companies are reportedly planning to merge. On Thursday, Reuters reported that SpaceX and xAI are holding merger talks ahead of a planned IPO. Part of their plan is to launch AI data centers into space (but unfortunately, only as far as Earth’s orbit).

Last week, it was reported that Musk planned to take SpaceX public despite having once said it wouldn’t happen until the company had a presence on Mars. Now, the IPO could happen as early as this year. Shares of xAI would reportedly be exchanged for shares in SpaceX under the merger. Reuters reports that two entities were set up in Nevada on January 21 to facilitate the deal.

If the idea of two Musk companies becoming one sounds familiar, that’s because it happened less than a year ago. In March 2025, xAI bought X, putting Grok (known for nonconsensual “nudifying” images) and X (infamous for being a far-right hellscape) together under one unholy roof.

The latest idea Musk is pitching is blasting AI data centers off into space. At last week’s gathering of the rich and powerful in Davos, Switzerland, he 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.” The idea is that data centers in orbit could harness solar power and reduce cooling costs. However, industry analysts and executives consider it a risky bet, questioning whether the savings would warrant the massive investment. If or when the AI bubble bursts, the plan could go down in flames — if not literally, then figuratively.