When Elon Musk announced that SpaceX would acquire his xAI company, most news outlets framed the merger as a corporate reshuffling, with some even describing the deal as a financial lifeline for the AI company. Musk’s own words, however, suggest something far more ambitious than a rescue mission. With the acquisition taking place on February 2, the early architecture of a system that ties energy, computing, space infrastructure, and artificial intelligence into one vertically integrated machine has begun to come into focus.
In December, Musk stated, “Space-based industries will vastly exceed the value of all of Earth, given that you could harness roughly 100,000 times more energy than Earth and still be using less than a millionth of the Sun’s energy.” The billionaire argued that Earth is the bottleneck and space is the throughput.
Just ten days before the merger announcement, Musk hinted at the scale of his vision: “If we harness even a billionth of the Sun’s power for AI/robotics, it will be a 1000X return. Money won’t mean much at that point.”
AI is rapidly becoming one of the most energy-hungry technologies ever built. Goldman Sachs projects that power demand from data centers will increase by 50% by 2027 and over 165% by 2030. Training advanced AI models requires enormous clusters of GPUs, and keeping them from overheating is an engineering challenge of its own. Nvidia’s latest chip was engineered to be better optimized to cool down the hardware, highlighting that advances in AI are as much about optimizing energy as increasing computational power.
Musk is taking a different approach to energy, looking to use SpaceX to create power grids in orbit.
Two days before the merger, SpaceX filed a request with the federal government, asking permission to launch a massive orbital data center in space. If the Federal Communications Commission (FCC) grants the request, SpaceX will be able to launch its reusable rockets to build a massive constellation of satellites powered by solar energy.
The power generated from these orbital data centers could help satisfy the enormous energy demands of xAI, depending on whether the technology operates as described.
According to SpaceX, orbital data centers operate with little maintenance cost and never have to deal with a cloudy day, as it is “always sunny in space.” With its vast new energy source, Musk predicts that xAI will, in turn, be able to solve bigger problems and manage larger computations.
Not all are as optimistic as Musk. “Talk of launching data centers into space, sounds somewhere between optimistic to delusional. The same could be said of the value public markets have ascribed to the billionaire’s corporate efforts to date,” wrote Robert Cyran for Reuters. He compared SpaceX and xAI’s merger to bankrupt companies in the dot-com bubble. He added, “Musk’s self-referential merger universe, if anything, revolves around even more outlandish hopes.”
The combined company is now valued at an estimated $1.25 trillion, making it the largest private tech enterprise in history, and the Financial Times reports that SpaceX is still aiming for an initial public offering in June. The IPO of the now combined company is expected to raise up to $50 billion, which would stand as largest IPO of all time.
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