Elon Musk’s SpaceX and xAI are in merger discussions ahead of a planned public offering this year. A deal would unite Starlink, the X social media platform, and the Grok AI chatbot under one entity, accelerating Musk’s AI ambitions.

The tie-up follows Musk’s push to deploy AI data centers in orbit, aiming to lower computing costs through solar energy. Merging could strengthen SpaceX’s bid for lucrative Pentagon AI contracts, especially after xAI secured a $200 million defense deal.

SpaceX, valued at $800 billion, plans an IPO that could value it above $1 trillion. xAI, valued at $230 billion, recently raised $20 billion. Musk has a history of combining his firms, including folding X into xAI last year and Tesla acquiring SolarCity in 2016.