Oliver Haslam on February 3, 2026, 5:34 pm

Elon Musk’s SpaceX Buys xAI With Plans For Space Data Centers

Elon Musk’s SpaceX has bought xAI, the AI company also owned by Musk. The buyout could see the two companies work together to put xAI data centers in space.

In a memo published on the SpaceX website, Musk pointed to the topic that has seen much discussion in recent months, suggesting that the current method of building data centers and running them on Earth is no longer sustainable.

“Current advances in AI are dependent on large terrestrial data centers, which require immense amounts of power and cooling,” Musk said. “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.”

Musk continued, saying that building AI data centers in Space “is obviously the only way to scale,” although some may argue against that claim. “To harness even a millionth of our Sun’s energy would require over a million times more energy than our civilization currently uses!”

Musk went on to say that he believes that building data centers that can make better use of solar power is the way forward.

By directly harnessing near-constant solar power with little operating or maintenance costs, these satellites will transform our ability to scale compute. It’s always sunny in space! Launching a constellation of a million satellites that operate as orbital data centers is a first step towards becoming a Kardashev II-level civilization, one that can harness the Sun’s full power, while supporting AI-driven applications for billions of people today and ensuring humanity’s multi-planetary future.

Whether any of that comes to fruition is anyone’s guess, and there is more than a little bit of sci-fi about Musk’s plans.

As for the buyout, the new, combined company is now valued at $1.25 billion according to a Bloomberg News report.