SpaceX has completed its acquisition of xAI, merging Elon Musk’s two ventures into a combined entity valued at $1.25 trillion. The deal positions the company to pursue space-based data centers, a concept Musk says is vital to meet AI’s growing energy demands.

Musk argues current AI development relies too heavily on Earth-based infrastructure, which strains power grids and communities. xAI’s existing data centers have faced backlash in Memphis, Tennessee. The acquisition could secure SpaceX’s revenue stream through increased satellite launches required for orbital computing.

Both companies now face divergent near-term goals. SpaceX focuses on Starship missions to the moon and Mars, while xAI battles Google and OpenAI in the AI race. Musk also runs Tesla, Neuralink, and The Boring Company, each with separate funding needs and regulatory scrutiny.

Investors will watch whether this mega-merger delays SpaceX’s IPO, expected as early as June. Analysts question if combining bloated burn rates—xAI reportedly spends $1 billion monthly—is a sustainable strategy long-term.