SpaceX officially acquires xAI, uniting Elon Musk’s AI and rocket ambitions

SpaceX has acquired xAI. The deal was confirmed Monday when the company published a memo from Elon Musk on its website. Elon wrote:-

“SpaceX has acquired xAI to form the most ambitious, vertically-integrated innovation engine on (and off) Earth.”

This merger now officially links a dominant rocket company with an AI startup that’s still early in its development.

Elon’s xAI is competing with OpenAI, Anthropic, and others that are already way ahead in building large language models.

Now, by connecting xAI to SpaceX, Elon is bringing rockets, satellites, and artificial intelligence into one machine, and that machine just happens to be entirely his.

The AI Wars continue to get more and more interesting.

Elon plans to use space-based power for AI

In his announcement memo, Elon said current AI demand for electricity can’t be handled by Earth-based data centers alone. He said space will be needed to scale AI further.

Elon wants to build orbital data centers powered by solar energy collected in space. He’s been talking about this idea for a while on X and at events. Now, with this deal, the pieces are all in his hands.

Elon claims that he has always believed the only way to build AI that can keep growing is to get it off Earth, so the plan is to collect power from the sun using satellites, then send that energy directly to computers running in space.

Buying SpaceX shares pre-IPO is a nightmare for regular people

Even though many want in on SpaceX ahead of the blockbuster IPO, investing in the company right now is nearly impossible.

If you’re not an employee or early investor, you’re locked out. Your best shot is being rich. The U.S. only allows accredited investors to buy this type of stock. That means you need to earn over $200,000 per year for two years, or have a $1 million net worth not counting your house.

And let’s say you do qualify. You’ll still need to find someone who already owns shares and is willing to sell. That might be a former employee or venture capitalist. Wealth managers at firms like UBS or Morgan Stanley might be able to help you track one down.

But SpaceX often blocks these deals. The company doesn’t like letting in new people without screening them. Even if the seller agrees, SpaceX might say no.

That’s why unrestricted shares sell at higher prices. They’re rare. The company also doesn’t like updating the registry when shares change hands. This makes private transactions harder.

Special-purpose vehicles and public funds offer some exposure

One workaround would be to buy into special-purpose vehicles, or SPVs. These are investment funds that hold large pools of SpaceX shares. People can buy small chunks of the fund.

This lets you get exposure to the company without owning shares directly. But you’ll need at least $100,000 and will still pay management fees. It’s legal, but expensive.

Platforms like Hiive and Rainmaker Securities let you browse nonpublic stocks. They vet sellers and buyers. You can compare prices and volume. But again, these shares might not be available when you look. And you’ll need six figures to play.

If none of that works, some mutual funds like Ron Baron’s $9.7 billion Baron Partners Fund, which has put over 25% of its portfolio into the company.

Interval funds also offer access. The $1.1 billion Private Shares Fund has nearly 14% of its assets in SpaceX. It charges a 1.9% fee and limits when you can pull money out.

Cathie Wood’s ARK Venture Fund has about $500 million in assets and counts SpaceX as its top holding. That one charges 2.75% in fees and has similar limits.

There are ETFs too. The ERShares Private-Public Crossover ETF, known as XOVR, went from $200 million to $1.6 billion after people found out it held a slice of SpaceX through an SPV. Baron also got an ETF called RONB, which has about 16% in SpaceX.

If all of that fails, there’s always Tesla. Elon said in 2024 that he’d reward loyal shareholders if his private companies ever go public. We were there.

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