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Elon Musks SpaceX acquires xAI to expand its AI and space operations

SpaceX has acquired Elon Musk’s AI startup xAI to support plans for space-based AI systems and orbital data centres beyond Earth.

Published By: Deepti Ratnam | Published: Feb 03, 2026, 09:52 AM (IST)

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One of the world’s wealthiest individual, Elon Musk is one again in the news, and no this time it is not any controversy, but a major technological advancement. He has taken an important step toward combining his technology companies. His rocket company, SpaceX, has acquired his artificial intelligence startup xAI. This is a high-value deal that will connect space technology with AI development. The acquisition happened with an aim to move powerful computing systems beyond Earth.

Why SpaceX Acquired xAI

SpaceX has confirmed the acquisition of an AI startup by Elon Musk, xAI, via official blog post. The deal will bring both the companies under one roof and one structure. Musk said this combination will not just help build a deeply connected system, but will also help in working on AI, satellite, and direct communication together. The main goal of this acquisition is to create faster innovation by keeping everything within one ecosystem.

Why Musk Wants AI in Space

As per Musk, the new-generation and advanced AI systems are consuming more energy and electricity than Earth can support, and hence, in the long-term we need proper solution to curb this issue.  The demand of AI is growing too fast and creating space-based data centers are the only practical solution to this. Additionally, these centers will use solar energy in orbit and will reduce pressure on Earth’s power grids.

Orbital Data Centres are in Plan

In order to support this idea, Elon Musk’s SpaceX has also filed an application with the US Federal Communications Commission. The significant idea behind this plan is to launch up to one million satellites to create an orbital data centre. Musk says, the satellites will then work together to support AI processing in space. If this happens, then it would be one of the largest satellite projects ever proposed.

Role of Grok

xAI is best known for Grok, AI chatbot that’s already linked with Musk’s social media platform X. Now, when SpaceX owns xAI, the role of Grok would also benefit from Starlink’s satellite network. This may allow real-time data sharing and wider reach for AI services.

What’s Ahead

As per Elon Musk space-based AI setup could help the long-term need of fulfilling space goals. These goals are expected to include permanent bases on the Moon, creating a human settlement on Mars, and more. Nevertheless, all of these thing are a far-fetched idea but still Musk believe that our advanced AI systems will play a key role in making space travel sustainable.

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Regulatory Concerns

The deal may face a little bit of review from regulators as SpaceX holds contract with NASA and US defence agencies. Authorities may examine risks related to this deal, including national security, data usage, and governance.