Elon Musk’s xAI at Crossroads: Co-Founder Exit & SpaceX Merger Reshape AI Ambitions
Elon Musk's artificial intelligence venture, xAI, faces a pivotal moment. A key co-founder's departure and swirling rumors of a deeper integration with SpaceX have thrown the startup's trajectory into question. What's the real plan?
The Internal Shift
Losing a founding architect isn't just a personnel change—it's a strategic tremor. It signals potential friction over vision, pace, or the daunting technical Everest of building safe, superhuman intelligence. The exit forces a recalibration. Will Musk double down on his original thesis, or pivot to align with SpaceX's interplanetary hardware?
The SpaceX Factor
Merger talks with SpaceX aren't about corporate tidy-up. They're about symbiosis. Imagine xAI's algorithms directly piloting Starship fleets or managing off-world resource networks. The merger could bypass traditional AI commercialization, embedding intelligence directly into the infrastructure of a multi-planetary species. No app store needed.
The Unspoken Calculus
For all the grand vision, the financial mechanics whisper a different story. Combining with SpaceX might just be a savvy move to shelter a cash-intensive AI moonshot under the wing of a government-contract-rich aerospace giant—a classic case of using rocket science to subsidize computer science.
The Path Forward
Musk now holds the cards: continue as an independent, bleeding-edge AI lab or become the central nervous system for SpaceX's physical empire. The co-founder's exit cleared a seat at the table. The merger talks set the table. Musk's next move will reveal whether xAI is destined to be a standalone brain or the cortex inside a silicon-and-steel colossus.
xAI faces legal heat as SpaceX prepares for IPO
The exits and restructuring are landing while xAI is already under serious pressure.Investigators in the U.S., Europe, and Asia are looking into how its chatbot Grok ended up spreading explicit deepfake images of real people, including minors.
These images were made and pushed out at scale using xAI’s AI systems. Regulators are now digging into whether the company violated any laws in those regions. It’s the kind of legal mess that can wreck a public listing if not cleaned up fast.
Meanwhile, SpaceX is getting ready to go public. Elon wants to list the company later this year. The IPO could hit a valuation of $1.5 trillion, according to Bloomberg. Big banks are already in line to help. Bank of America, JPMorgan, Goldman Sachs, and Morgan Stanley are all expected to lead. And Robinhood, the same one that brought Gen Z into stock trading, is also fighting for a piece of the action.
The deal also wrapped xAI’s other assets under SpaceX, including the Grok chatbot and the social platform X, which Elon bought earlier in March 2025 using another all-stock transaction through xAI. Now that’s all under one roof, tied directly to SpaceX.
Elon started xAI in 2023, along with eleven other people. He said the goal was to “understand the true nature of the universe.” Not exactly small talk. At the time, it was meant to battle OpenAI and Google. That ambition still exists. But now xAI is a part of a bigger machine, one that’s also launching satellites, rockets, and maybe soon, IPO paperwork.
On the tech side, Elon wants to put AI data centers in space. The idea is for SpaceX to host computing power in orbit, with xAI tapping into that for large-scale AI processing. If the engineering holds up, it could be a major step.
The idea is to run AI data centers in space using Tesla energy systems and SpaceX rockets. Tesla’s energy storage would keep the power flowing through solar. Elon even said Starship could carry Tesla’s Optimus robots to the moon or Mars. Nobody knows exactly why, but he keeps talking about it.
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