Musk merges xAI into SpaceX as he tries to win over Wall Street

Elon Musk this week combined SpaceX, his rocket and satellite company, with xAI, the artificial intelligence and social media business he controls. He says the merger will let SpaceX move A.I. data centers into orbit to tap abundant solar power and sidestep terrestrial bureaucracies — a vision that many found surprising given how different the businesses are.

The deal also has a clear financial purpose: it boosts SpaceX’s size ahead of a possible initial public offering, valuing SpaceX at $1 trillion and xAI at $250 million, and paving the way for a potential $50 billion raise. Investors see access to A.I. upside through the combined company, even as experts warn of serious technical and physical limits to building data centers in space.

“If you take Elon Musk out of the picture, it’s an odd move to make,” said Eric Talley of Columbia Law School, but he added that Mr. Musk has a record of pulling off unusual gambits. The expanded company brings reputational and governance risks.