Earth's electricity can't feed AI? Analysis of SpaceX's acquisition of xAI to build a "Space Computing Power Empire"

Valued at $1.25 trillion, Elon Musk integrates xAI into SpaceX to build an interstellar computing empire. This is not just industry consolidation but a high-stakes gamble involving computing power, energy, and the future of space, marking the dawn of humanity’s space-based infrastructure era.
(Background recap: Breaking news! SpaceX acquires xAI with a valuation of $1.25 trillion, Musk creates a “Space + AI” giant gearing up for IPO)
(Additional context: Musk’s 3-hour deep dive: From AI paradise or hell, to out-of-control US political machinery and the only solution to save civilization)

Table of Contents

• Core Transaction Details
• Why Reach for the Sky? Earth’s Power Can’t Feed AI Anymore
• The Madness of “Vertical Integration”
• Shadows and Unknowns
• Summary

Valued at $1.25 trillion, how will Musk’s space computing game unfold? Today (February 3, 2026), the tech world is once again buzzing about Musk, as xAI officially merges into SpaceX.

This is no simple acquisition but a mega-industry integration valued at up to $1.25 trillion. It’s not just a “handing over” but a high-stakes gamble involving computing power, energy, and the future of interstellar civilization.

This move not only tightly binds the world’s largest commercial space company with the most aggressive AI unicorn but also marks the emergence of Musk’s long-planned “Space Computing Empire.”

Core Transaction Details

Elon Musk personally signed the announcement of the acquisition of xAI. Based on current disclosures, the scale of this deal is enormous:

• Valuation: According to Bloomberg, the combined entity is valued at up to $1.25 trillion. SpaceX’s valuation is approximately $1.25 trillion, with xAI contributing about $250 billion.
• Takeover: After the acquisition, SpaceX will likely fully control all of xAI’s assets, including the Grok model, massive GPU clusters, and the social platform X (formerly Twitter), which xAI acquired in March 2025.
• IPO Prelude: Bloomberg citing sources reports that SpaceX still plans to go public later this year. Post-merger, the company’s stock is expected to be valued at $526.59 per share. SpaceX previously aimed to raise up to $50 billion through an IPO, making it the largest IPO to date.

It may seem that Musk is simply transferring xAI assets into SpaceX, but a closer look reveals the logic has long been in the making. As early as last month, Tesla announced a $2 billion investment in xAI, and now with SpaceX’s direct acquisition, Musk’s “Muskonomy” is pushed to the extreme of vertical integration.

Why Reach for the Sky? Earth’s Power Can’t Feed AI Anymore

Regarding this acquisition, Musk stated plainly: “Earth’s power can no longer feed AI.”

Though this claim sounds exaggerated now, it hits the core. As large models’ parameters grow exponentially, data center energy consumption and cooling have become the biggest physical bottlenecks for AI development. In Musk’s vision, since ground-based power and cooling are limited, the solution is to move computing to space.

• Orbital Data Centers: SpaceX plans to launch up to 1 million dedicated satellites to build “Orbital Data Centers.” By late January 2026, SpaceX submitted a new application to the FCC, outlining plans for an “Orbital Data Center System” and requesting permission to launch and operate a constellation of up to 1 million satellites. The Starship test flights and mass production are also proceeding as scheduled. This is the first step toward achieving Kardashev Type II civilization.
• Space’s Natural Advantages: Space offers near-constant, unlimited solar energy and an environment close to absolute zero in deep space, providing excellent cooling conditions.

Musk said, “This is not just the start of a new chapter but the birth of a new work — we aim to create a perceiving Sun, understand the universe, and extend the light of consciousness to the stars.”

Though romantic in tone, this vision is not out of reach. He predicts that in 2-3 years, space will become the cheapest place to generate AI computing power. By then, not only tech companies but also human understanding of the physical world and new technological inventions could see explosive breakthroughs.

In this vision, xAI is no longer just a coding and chatting AI company; it becomes the “brain” of SpaceX’s massive satellite network, while SpaceX transforms into a “space supercomputing operator” with unlimited computing power and energy.

The Madness of “Vertical Integration”

Looking from a higher perspective, Musk is building an astonishing full-industry chain loop, covering all core links from space to ground:

2. Energy & Launch (SpaceX): Using Starship to send computing infrastructure into orbit.
3. Connectivity & Transmission (Starlink): Building a global space communication network to cover remote areas and mobile scenarios where ground networks can’t reach, also a key part of SpaceX’s “Mars colonization” and space infrastructure plans.
4. Data & AI (X): Through the social platform X, now merged with xAI, controlling the world’s largest real-time human data stream for training models and serving as user entry points.
5. Smart Terminals (Tesla/Optimus): Ground-based Tesla vehicles and humanoid robots will be the final execution terminals of this space computing system.

Musk said, “We want to create a perceiving Sun, understand the universe, and extend the light of consciousness to the stars and oceans.”

Shadows and Unknowns?

This grand interstellar computing narrative is not without risks. Challenges and controversies are equally significant:

First, technical hurdles. While space cooling is theoretically feasible, issues like cosmic radiation damaging GPUs, high costs of satellite maintenance, and physical delays in data transmission remain engineering nightmares.

Second, financial black holes. Although xAI has a market cap of $250 billion, it burns cash rapidly—Bloomberg reported in June that xAI consumes about $1 billion in cash monthly. Despite SpaceX’s strong cash flow, with revenue projected at $15-16 billion in 2025 and profits of $8 billion, integrating xAI—still in a “bottomless capital expenditure” stage—may drag down SpaceX’s IPO performance.

Third, regulatory risks. A commercial giant controlling rocket launches, satellite internet, global social discourse, and top AI models will inevitably face strict scrutiny from regulators worldwide. Antitrust, data security, and other regulatory challenges could become major hurdles Musk must confront.

Summary

Sending AI to space, giving rockets a brain. It sounds like science fiction, but the undeniable truth is that no matter how sci-fi the concept of space data centers, it reflects an irreversible trend: the explosive demand for AI computing power is forcing tech giants to redefine the physical boundaries of infrastructure, moving from Earth to space—an inevitable direction for future computing development.

This high-stakes interstellar computing gamble leaves us, as observers, only to watch and wait.