Musk considers merger of SpaceX and xAI as Tesla results underwhelm
The dream of data centres in space could be one step closer to reality as Elon Musk-controlled companies SpaceX and Starlink consider a merger.
The value of the deal, the main reasons behind it and the potential timeline remain unknown. Sources suggest that, in the event of a definitive agreement, xAI shareholders would receive shares in SpaceX. Notably, both companies have recently registered in Nevada, a step that could potentially simplify the merger process.
Corporate documents reviewed by Reuters indicate that Bret Johnsen, CFO of SpaceX, is involved in newly created entities linked to the possible merger. In addition, some xAI executives may have the option to receive cash instead of shares in SpaceX.
The possible merger fits with Musk’s broader vision of establishing large-scale, solar-powered AI data centres in space. Through xAI, he is developing Colossus, a massive supercomputer for AI training in Memphis, Tennessee.
Musk has stated his belief that space will become the most cost-effective location for AI infrastructure within two to three years, thanks to abundant solar energy and natural cooling. He regards space-based data centres as crucial for the future.
If the deal goes ahead, it would mark a continuation of the consolidation trend within Musk’s business ventures. Previous examples include Tesla’s acquisition of SolarCity in 2016 and the integration of X into xAI last year via a share swap. Notably, xAI has secured a contract worth up to 200 million dollars (around 167.6 million euros) to supply Grok products to the Pentagon.
The audacious move comes just as Tesla posted its first annual drop in revenue, with net profit in the quarter falling by 61% to $840 million and annual profit plunging from $7.1 billion in 2024 to $3.8 billion.
Tesla announced a $2 billion investment in xAI, which developed the controversial chatbot Grok – currently under investigation by the EU.
Tech giants report strong profits
Meanwhile, other tech giants reported strong earnings. Meta, the parent company of Facebook and Instagram, saw its revenue rise by 6% to $59.9 billion (around €50.1 billion), resulting in a profit of $22.8 billion (around €19.1 billion).
Samsung Electronics, the world’s largest producer of memory chips, reported more than a threefold increase in profit to 20.1 trillion won (€11.7 billion) on revenue of 93.8 trillion won (€54.8 billion).
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