SpaceX and xAI Are Merging Into a Very Silly-Sounding Conglomerate. Take It Seriously

SpaceX is acquiring xAI. Ever since this merger of two Musk companies became a rumor, crazy numbers like $1.5 trillion started being thrown around when discussing the total valuation of SpaceX, so you might sum it up by saying “Combining SpaceX and xAI gets you the biggest IPO of all time!” and yeah, that’s more plausible now than ever. For reference, SpaceX’s valuation was estimated at around $800 billion less than two months ago. 

But is this merger as silly as it sounds?

The combined company will be a “vertically-integrated innovation engine,” according to a new SpaceX press release with Elon Musk’s personal signature on it. By his own reckoning, the company now deals in “AI, rockets, space-based internet, direct-to-mobile device communications and the world’s foremost real-time information and free speech platform.” Another way of saying this might be that SpaceX is now the company behind vertically-landing rocket boosters, the majority of the satellites currently in orbit, very fat rockets that tend to explode, an ISP, the microblogging app known as X, a sassy chatbot called Grok that’s famous for lewd images, and much much more.

SpaceX will now own, for instance, Grokipedia, the AI-written, anti-woke parody of Wikipedia. And remember Vine, the defunct 6-second video social media app? Yes SpaceX, which possesses billions of dollars in Pentagon contracts and is responsible for crewed NASA missions, now owns the rights to Vine too. Musk claims he’s bringing it back “in AI form.”

As many have pointed out before me, SpaceX became a genuinely indispensable player in humanity’s aerospace and space travel efforts through an iterative process involving an extraordinary number of spectacular and public rocket explosions that almost certainly would not have been tolerated if SpaceX were a government agency. It has always walked a delicate tightrope, keeping boring people happy, while also subject to the silly stuff and horrors that go along with being run by Elon Musk.

Gwynne Shotwell, the president and COO of SpaceX, has been described by the Wall Street Journal as “a Musk translator, especially for officials who depend on SpaceX but are occasionally unnerved by his activities.” In that same Journal article, former NASA administrator Bill Nelson—also a Democratic ex-Senator—called Shotwell, “the steady hand” at the company, and added, “I have a great deal of confidence in her. Because of that, I have a great deal of confidence in SpaceX.”

Back in 2022, when Musk was in the middle of buying Twitter in as chaotic a fashion as possible, Nelson says he called Shotwell, and said, “Tell me that the distraction that Elon might have on Twitter is not going to affect SpaceX.”

“I assure you, it is not,” he says she told him. “You have nothing to worry about.” 

Now imagine being Shotwell four years later. Twitter is now X. Last year, the proprietary AI chatbot on X briefly started calling itself “MechaHitler” at one point, and then it generated tons of scantily-clad pictures of children. So not only has the drama increased, but you’re the president and COO of the company that made all that stuff too.

And imagine Shotwell having to handle this merger while Musk, the attention-starved celebrity CEO of this conglomerate has spent the last few days trying to post his way out of any consequences or disapprobation brought about by the public disclosure of emails in which he repeatedly asked Jeffrey Epstein if he could party on his private island.

So one can only speculate what Musk’s mental state was when he finalized the plans for this merger. But what stands out to me is that he wants investors in xAI and SpaceX—and perhaps starting in June, future holders of publicly traded SpaceX stock—to believe that this merger creates a company that gels and has a unified agenda. But you might want to take as big of a bong rip as you can before you try and get your head around that agenda as Musk describes it in his press release:

This rocket and AI company will actually be an AI-in-space company, you see, because, according to Musk’s estimate, “within 2 to 3 years, the lowest cost way to generate AI compute will be in space.” After all, “in the long term, space-based AI is obviously the only way to scale.” Obviously.

But training models with space compute is just the beginning, because Musk claims that by combining these two concepts, they’ll be “scaling to make a sentient sun to understand the Universe.”

Companies don’t have to always make sense. Samsung has hotels. Red Bull has a nature magazine. Konami has aerobics gyms. Sometimes these incongruities are prosperous leftovers from a different era for a company, but sometimes they reveal the caprice or frivolity of company leadership, which can be no big deal.

But then again, it’s not farfetched to think that Elon Musk’s caprice—and the fact that an economically powerful subset of Wall Street bulls think that caprice is tantamount to wisdom—may soon control the world’s best-funded AI company at a time when AI is the load bearing structure propping up the whole economy. If the IPO goes well (the New York Times’ sources say Musk hopes it will raise $50 billion), that AI company is going to be in your 401(k) while it’s also in charge of the lives of astronauts. 

In other words, we’re headed for a time when the Wall Street bulls will have to be right. More than ever Elon Musk’s caprice may have to actually be wisdom, as implausible as that may be. AI had better not be a bubble if this IPO goes well, and the value of Musk himself had better not be inflated either. All of our well-being may just depend on it.