As SpaceX prepares for its IPO, Elon Musk's empire could get even more intertwined

By William Gavin

Two business entities were reportedly made to facilitate a SpaceX-xAI merger just a few days after Tesla agreed to invest in xAI

Elon Musk, the world's richest individual, could bring two of his biggest holdings closer together.

Elon Musk is reportedly set to bring his social-media platform, artificial-intelligence startup and rocket company under a single roof.

Reuters, citing a person familiar with the matter, reported Thursday that xAI and SpaceX are exploring a merger that would take place ahead of the latter company's blockbuster initial public offering. Already, they're two of the most valuable private companies in the world.

Alternatively, Bloomberg News reported later Thursday that SpaceX might merge with Tesla (TSLA) instead, sending shares of the EV maker up 3% in after-hours trading.

Earlier this month, xAI, which also owns X, closed a $20 billion Series E funding round. Although it did not disclose its new valuation, the company is reportedly worth at least $230 billion.

SpaceX was most recently valued at $800 billion, but is eyeing a $1.5 trillion market capitalization following an IPO that could occur as soon as late June. It's unclear how a combination with xAI, which develops the Grok large language model, would impact its plans.

Read: The 'space economy' is booming. Here's where most of the money is going.

Musk appeared to confirm the Reuters report, agreeing with a post on X that said SpaceX would become "the Dyson Swarm company" because of the merger. (A Dyson swarm is a concept referring to a megastructure of solar-energy collecting satellites. SpaceX plans to operate orbital-based solar-powered data centers.)

A representative for SpaceX did not immediately return a request for comment. An inquiry sent to xAI was met with an automated message.

The possible merger would see xAI shares exchanged for stock in SpaceX, according to Reuters. However, some xAI executives may also have the option to receive cash instead of shares in the rocket maker, according to the report.

Two business entities were created in Nevada on Jan. 21 to carry out the transaction, Reuters reported. Both list SpaceX CFO Bret Johnsen as an officer, but not much else was disclosed in the companies' filings.

The entities were created just five days after Tesla entered into an agreement to buy $2 billion shares of Series E preferred stock in xAI and collaborate on AI. Tesla on Wednesday disclosed the deal, which is set to close by the end of March, as it reported fourth-quarter earnings.

XAI is already working with both Tesla and SpaceX, which has also invested $2 billion in the startup.

Tesla uses Grok as a voice assistant for its electric vehicles and Optimus humanoid robots, while SpaceX has the chatbot serve as a customer-support agent on its website. Additionally, xAI has purchased about $621 million worth of Tesla's Megapack batteries to help power its data centers over the past two years, according to corporate filings.

A merger between SpaceX and xAI wouldn't be the first coupling between companies that Musk leads. Last year, xAI acquired X in a deal that valued the social-media website, formerly known as Twitter, at $33 billion. And in 2016, he used Tesla shares to purchase SolarCity, a solar-energy company that he chaired.

In addition to SpaceX, xAI and Tesla, Musk has leadership roles at the Boring Company, a tunneling company, and Neuralink, which is developing brain-chip interfaces. Neuralink this week said it had implanted its technology in 21 patients as part of clinical trials.

Don't miss: Tesla could slide back into cash-burn mode as Elon Musk pursues his costly AI vision

-William Gavin

This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

01-29-26 1833ET