SpaceX to Merge with xAI?

In late January 2026, Reuters reported that the two privately held companies are in talks to combine ahead of a planned SpaceX IPO later this year. The reported structure is a share swap: xAI shares exchanged for SpaceX shares, with some xAI executives potentially offered cash instead of SpaceX stock. Reuters also said two Nevada entities were created on January 21 that could help facilitate the transaction, and noted that Elon Musk, SpaceX, and xAI did not respond to requests for comment.

The strategic logic being floated is less “synergy” and more “Musk wants a single war chest for an expensive AI + space vision.” Reuters framed the deal as potentially accelerating SpaceX’s push toward space-based data centers, tying it directly to Musk’s stated belief that orbit will become the cheapest place to run AI. At the World Economic Forum in Davos, Musk said: “the lowest cost place to put AI will be in space. And that will be true within two years, maybe three at the latest.”

A day after the merger-talk report, Reuters separately noted Starlink updated its privacy policy to allow customer data to be used to train AI unless users opt out—fueling speculation that a combined company could feed more data into xAI’s models. One privacy-law professor, Georgetown University’s Anupam Chander, summed up the vibe: “It certainly raises my eyebrow and would make me concerned if I was a Starlink user.”

Polymarket odds give the marger 81% of happening, Source: X

As of February 2, 2026, other outlets said discussions were “advanced” and could be announced soon—but also warned they could still fall apart.