Space and AI Converge: SpaceX–xAI Merger Sparks Rally in U.S. Space Stocks

U.S. space-related stocks moved higher this Tuesday following the announcement of a landmark strategic merger between SpaceX and xAI, the artificial intelligence company founded by Elon Musk. The deal creates a new private tech powerhouse with an estimated valuation of US$1.25 trillion, reinforcing the growing convergence between the space economy, artificial intelligence and global digital infrastructure.

Space and AI Converge: SpaceX–xAI Merger Sparks Rally in U.S. Space Stocks

Market reaction: confidence returns to the space sector

Although SpaceX remains privately held, the announcement immediately lifted investor sentiment across the publicly traded space ecosystem. Shares of companies such as Rocket Lab, Planet Labs, AST SpaceMobile, Intuitive Machines and Redwire posted gains, reflecting renewed confidence in long-term growth prospects for the commercial space industry.

For investors, the merger signals that space is no longer a niche or speculative market, but a core pillar of next-generation infrastructure, closely tied to data, connectivity and AI.

AI beyond Earth: data centers in orbit?

The strategic rationale behind the merger goes far beyond corporate restructuring. By combining SpaceX’s launch capabilities, satellite networks and Starlink infrastructure with xAI’s artificial intelligence platforms, Musk is positioning the new entity to explore AI computing beyond Earth’s surface.

According to industry analysts, one of the most disruptive ideas behind the merger is the potential deployment of AI-focused data centers in space, powered by constant solar energy and benefiting from natural cooling conditions. Such systems could dramatically reduce energy and cooling costs compared to terrestrial hyperscale data centers an increasingly critical issue as AI models become more energy-intensive.

From an energy and sustainability perspective, this concept challenges traditional assumptions about where and how digital infrastructure should be built.

Strategic implications for energy, connectivity and geopolitics

The fusion of AI and space infrastructure could reshape multiple sectors simultaneously:

• Global connectivity, through smarter and more autonomous satellite networks

• Energy efficiency, by leveraging uninterrupted solar generation in orbit

• Data sovereignty and security, with computing resources distributed beyond national borders

• Defense and government services, where AI-driven space systems play a strategic role

For the clean energy transition, the move highlights a paradox: while AI increases global electricity demand, it may also accelerate innovation in alternative energy generation and ultra-efficient computing architectures.

IPO expectations and a new tech category

The merger is also widely interpreted as a preparatory step toward a future SpaceX initial public offering, potentially as early as 2026. Market estimates suggest a public valuation could exceed US$1.5 trillion, placing the company among the most valuable technology groups in history.

More importantly, the deal may mark the birth of a new tech category: companies that simultaneously operate in space, energy, artificial intelligence and global communications sectors that will define economic and geopolitical power over the next decades.

Space and AI Converge: SpaceX–xAI Merger Sparks Rally in U.S. Space Stocks