So Elon Musk had just created the most valuable private
company on Earth, and possibly outside of Earth too.
Like in the realm of orbit of Earth, SpaceX and XAI are
merging. The combined entity is valued at
$1.25 trillion. That's a trillion with AT.
To put that into perspective, that's larger than the entire
GDP of the Netherlands. One man now controls a company
worth more than many countries produce in a year.
The move combines Musk's rocket empire of SpaceX with his
artificial intelligence company into a single corporate
structure. I got a lot of thoughts on why
this is happening and what it means for the space industry and
why the timing really matters more than you might think.
And we're going to get back into that after this very short
break. Now, let's start with the
number, the valuation, because it's genuinely staggering, $1.25
trillion. SpaceX was last valued around
350 billion in late 2024, hit roughly 50 billion after its
latest funding round. So that's for XAI.
So where does that extra 850 billion come from?
Synergy. The corporate term is we all
love it. And I don't use that word
lightly because it's usually corporate nonsense BS.
But in this case there's a real argument.
SpaceX has Starlink, Starlink has millions of subscribers and
a constellation of over 6000 satellites beaming Internet to
Earth. XAI needs massive amounts of
computing power to train its models, and Musk has been very
vocal about the bottleneck being energy and infrastructure for AI
compute. Now here's where it gets really
interesting though. It's an infrastructure company,
and then infrastructure. The ground systems, the power
systems, the global reach. That's exactly what an AI
company needs to scale. So the timing here isn't random,
though we're in the middle of an AI arms race.
Open AI, Google, Anthropic, Meta for all, pouring billions of
dollars into compute infrastructure.
The constraint isn't really the algorithms anymore.
It's the physical stuff. It's the data centers, the
power, the chips. And Musk has been building
massive AI supercomputer in Memphis.
He's buying up all the NVIDIA GP OS by the 10s of thousands.
But he's been doing this through XAI as a separate company,
separate funding and separate investors.
But by merging these companies they consolidate the capital and
one set of investors. Just one thing and critically 1
strategic direction. SpaceX is cash flow from
Starlink and government contracts can now directly fund.
XA is infrastructure build out. XAI needed the money.
No more finding funding, no more shuffling money between
entities, no more competing for resources internally now.
So what does XAI do for SpaceX? That's what I keep coming back
to. What are they going to do?
How are they going to work together?
Autonomous systems is all I could figure out.
SpaceX already uses AI for landing rockets.
The Falcon 9 boosters that land themselves on drone ships?
That's a machine learning problem.
The Starship flight computer, same thing.
Now imagine the same team with access to XAIS foundational
models. You could have AI systems that
don't just follow pre programmed trajectories but actually reason
about unexpected situations. If you have an engine out during
ascent or the weather conditions change, AI figures out the
optimal response in real time. Super easy right?
Musk just put his rockets and his engineers in the same place
as his AI researchers. Everything just changed.
Now what if we thinking about Starlink plus Grok here?
Everybody has their opinion on Grok, right?
There's another angle that I think people are sleeping on.
Grok already integrates with X, the social media platform that
Elon owns. But what if it integrates with
Starlink? Think about it.
Starlink has direct to device capability.
Now your phone can connect to satellites without any special
hardware. And what if every Starlink
terminal, every connected device has a Grok built in?
Because of this, it's an AI assistant delivered from space.
Is that crazy or what? Musk has talked about building
and everything app? Of course.
That's what he wanted X to be, right?
A super app that combines social media, payments, AI ride hailing
connectivity. The merger gets him one step
closer. That's all there is to it.
The infrastructure layer is now unified.
And eventually maybe they'll get Tesla on board and bring all of
his companies, merge all of his companies together.
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Now let's talk about what this means for everybody else.
Amazon, Amazon, Amazon has been trying to get Project Kuiper off
the ground for years. They've launched some test
satellites, but they're way behind Star Lake in development.
Jeff Bezos also has Blue Origin, which is finally getting
competitive with New Glen. But Blue Origin and Amazon are
separate companies, different investors.
They have different managers, different staff, different
timelines. Now must just show the vertical.
Vertical integration is superior.
You want to win in space? You want to win the race?
Neither. Rockets, satellites, ground
systems, the software, and apparently now the AI.
And Amazon might need to think hard about whether keeping these
companies separate makes sense anymore.
Google has invested in SpaceX for years.
They're an investor in Starlink, but they're also building their
own AI models that compete directly with XAI.
Puts them in an awkward position.
Now. Do you keep funding the
competitors infrastructure and the hardware and the software?
That's up to them. I I see a reason for it, but
they probably, they, they know better than us, right?
Let's talk about the money. That's what this all comes down
to, right? What does this mean for
investors? SpaceX has a massive list of
backer backers. Founders Fund, Sequoia, Google,
Fidelity, T Rowe Price. They're just, those are the
biggest names in venture capital and assets management.
They're all part of SpaceX in some way.
X AI has its own investor base. Some overlap, but not
completely. A merger means these investor
groups are now together. The cap table just got very
interesting. But here's the thing, at $1.25
trillion, who can even invest at this level?
This isn't just venture capital. You need sovereign wealth funds
now. National pension funds, the
biggest pools of money on our planet, have to go into this
thing, which is wild. Saudi Arabia's Public Investment
Fund has been looking for ways into the AI space.
Abu Dhabi, Singapore and Norway, they're all players who write
the checks that are this big must just create an asset that
appeals to the very top of that capital pyramid.
The very top at the top, at the top, all the people, they have
all the money. All the governments have the
money. Sovereign wealth funds.
There you go. So it's going to be interesting
how this works out, and I would be lying if I said I wasn't
thinking about antitrust here right now.
The FTC has been aggressive about tech mergers.
They've blocked a bunch of deals over the past few years.
But it's tricky. SpaceX and XAI aren't direct
competitors with anyone in a way that makes traditional antitrust
case sense. SpaceX competes with ula and
Blue Origin and Rocket Lab in launch.
Starlink Complete competes with traditional telecom.
XAI competes with open AI and Google and AI.
So there's no obvious market where this merger reduces
competition. If anything, it creates a more
formidable competitor in just multiple markets, not just one
place. The sheer size might attract
attention from regulators. When one person controls a $1.25
trillion entity with national security implications, rockets
that launched spy satellites, and AI systems that could be
used for who knows what. Regulators tend to pay attention
to that kind of stuff. I don't think it's blocked
though, but it wouldn't be surprised if there are
conditions attached. Maybe data handling requirements
for Starlink, maybe restrictions on what AI models can be
deployed on government missions, something that gives regulators
a way to claim over a site. Now let's talk about what's
different. You know, I've studied Elon and
his companies for years. We haven't seen anything like
this before. He's built single companies,
SpaceX, Tesla X, etcetera, and they've all been kind of his
thing, right? Tesla went public, SpaceX state
Private X was an acquisition, XAI was a new startup.
The Boring Company and Neurolink are basically just kind of side
hustles for Elon right now. That's the first time that Elon
has combined two of his major companies into a single entity.
Suggests he's thinking about his empire differently now, less
like a portfolio of bets and more like a vertical integrated
system. I think he's going to do Tesla
in the next year or so if I mean, he has to get everybody on
board, right? He has to get everybody at Tesla
on board to do this because that would be a huge merger.
Merge everything together, SpaceX, Tesla, XAIX, everything,
put that all together in the mega Corp, right?
The question is whether this is the first move or the last.
And since it's XAI and they use Crock, does X get folded in?
Does Tesla somehow connect all this with the robots and
optimists? Musk has always talked about his
company's server serving like a larger mission, human survival.
He wants to send people to Mars so humanity can continue on
forever. But maybe this is him actually
building the structure to pursue that.
I mean, maybe he's, maybe he's building the machine that will
build a machine that'll get us to Mars eventually.
Maybe this is him actually doing one company.
Finally, the one vision. You know how we wanted to like
the X company, a trillion dollars to make it happen.
They need all the money, right? But there's also things that we
don't know. There's a lot that we don't know
actually. What's the governance structure?
Who runs the combined company? What happens to the existing
executive teams? We don't know the exact deal
mechanics. And is this a merger of equals?
Is 1 company acquiring the other or are there new shares being
issued? Are these people going to be
deluded? You know, the SpaceX people or
the XAI investors? Nobody knows and we don't know
how employees feel about this. SpaceX has a distinct culture.
Move fast. Engineer the hell out of things,
launch rockets, get to Mars. Damn it.
XAI has been more of kind of like a research lab, building
foundational models, competing with open AI, intellectually
grok, etcetera. Cultures might clash, or they
might energize each other. They might realize that they
need AI to get them to Mars, so that might be a thing.
So Musk now controls a company that's $1.25 trillion.
You can launch rockets to Mars eventually and build AI systems
that might eventually think better than humans, Optimus.
Whether that is exciting or terrifying, that's up to you.
Depends on how you feel about Elon and how he could control
everything. Because he could control the
skies at this point, right? If he has AI and Starship
working together with Starlink and Grok on every phone that has
Starlink, he's controlling a lot of stuff at that point.
But it's a huge scale. It's undeniable.
This isn't a startup. SpaceX isn't just that little
company in the dirt lot at the, you know, at the end of Star
Base in Texas anymore. It's an institution.
It's mature for better, for worse.
These kind of institutions shape the future.
Now, if you've been here this whole time, I want to say thank
you for participating and being part of this.
So please take a second hit the subscribe button, leave a
comment down below. Let me know what you think about
all the stuff. Are you scared or I don't know?
Are you energized? Are you excited about this?
Because there's some part of me that's thinking like oh AI more
AI in SpaceX stuff. It might be pretty cool.
I don't know, it's, it's a little bit of both.
So let me know what you think of the comments.
All right, take Care now.