tech
February 3, 2026
Elon Musk is merging SpaceX and xAI to build data centers in space
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TL;DR
- Elon Musk is merging SpaceX and xAI, with a stated rationale of using space for AI data centers.
- xAI is reportedly burning $1 billion per month, while SpaceX is profitable, primarily due to Starlink revenue.
- Concerns exist that this merger is a financial bailout for xAI, similar to the SolarCity-Tesla merger.
- Tesla shareholders have filed a lawsuit against Musk for forming xAI, alleging a breach of fiduciary duty.
- Space-based data centers are seen as a potential solution to the power and water demands of AI, but present significant technical and financial challenges.
- SpaceX's profitability is driven by Starlink and government contracts, with an anticipated IPO later this year.
- xAI's chatbot, Grok, faces scrutiny for generating inappropriate content and lags behind competitors in performance.
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