SpaceX, led by CEO Elon Musk, acquired xAI, Musk's artificial intelligence startup, on Monday, February 3, 2026, with plans to develop space-based data centers, according to a memo posted on the rocket company's website. The acquisition creates what SpaceX claims is the world's most valuable private company.
Musk stated the merger is driven by the need for data centers in space to support the growing demands of AI. "Current advances in AI are dependent on large terrestrial data centers, which require immense amounts of power and cooling," he wrote. He added that "global electricity demand for AI simply cannot be met with terrestrial solutions, even in the near term, without imposing hardship on communities and the environment." This comes as xAI has faced accusations of negatively impacting communities near its terrestrial data centers, such as those in Memphis, Tennessee.
The move to space-based data centers is intended to overcome the limitations of terrestrial infrastructure. The immense power and cooling requirements of AI data centers are becoming increasingly unsustainable on Earth, prompting the search for alternative solutions.
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