In 2026, Elon Musk did something very much in his style: first merging SpaceX and xAI into a trillion-dollar behemoth, then taking that valuation to knock on the NYSE's door.
In February, the merger was completed. The combined entity was valued at $1.25 trillion (SpaceX at roughly $1 trillion, xAI at about $250 billion, with xAI also owning X/Twitter). On April 1, SpaceX filed a confidential S-1 with the SEC, targeting a valuation of $1.75 trillion and aiming to raise $40-80 billion.
If that valuation holds, it would be the largest IPO in human history, leaving Saudi Aramco's 2019 $29.4 billion offering far behind.
Why Merge the Two Companies Before Going Public
On the surface, this maneuver seems roundabout, but the logic is clear.
First, SpaceX has long faced pressure to go public — employees need to cash out options, and early investors (Fidelity, Google Ventures, Founders Fund) need an exit. But the timing for a direct IPO was never right; the last time market conditions were favorable, SpaceX was still working on Starship.
For xAI, going public alone would make it difficult to tell a story worth over $1 trillion — after all, Grok is still playing catch-up to GPT and Claude, and its annualized revenue isn't enough to support that number.
After the merger, the narrative changes:
This is not an AI company, but an AI company with orbital computing infrastructure.
Starlink's 92,000 users, over $12 billion in annual revenue, plus the global data collection capability enabled by satellite coverage — this combination led analysts to coin a new term: "orbital data center." Satellite base stations serve as AI compute nodes, bypassing the land constraints and energy regulations of ground-based data centers.
Whether this concept can ultimately be realized, it certainly sounds compelling enough during IPO roadshows.
What Role Does Grok Play
xAI's core asset, Grok, is now deeply integrated into SpaceX's operational architecture. This includes:
- Real-time data analysis for Starship launch procedures
- AI-powered Starlink customer service systems
- Continuous model training using social data from the X platform
Musk has repeatedly emphasized in public that Grok's data advantage lies in X — real-time text data from hundreds of millions of users worldwide, which he considers an asset no other model possesses.
How much substance this claim holds is debated in the industry, but from the perspective of training data diversity and timeliness, it is indeed unique.
Financial Reality and Valuation Debate
The combined entity's total revenue for 2025 was roughly $20 billion (SpaceX about $16 billion, with xAI contributing the remainder).
Target valuation of $1.75 trillion ÷ $20 billion revenue = 87.5 times price-to-sales ratio.
This number is hard to understand within traditional valuation frameworks. For comparison: OpenAI's current price-to-sales ratio is around 70x, while Google's core business is at 6-7x.
Motley Fool analyst Brett Schafer advised investors "not to buy on the first day of the IPO," citing the excessively high valuation multiple, which could lead to disappointing returns even if the company continues to grow.
Such advice has historically had limited effect on Musk's projects.
Regulation Is the Biggest Uncertainty
Dual scrutiny from the SEC and FAA is an unavoidable hurdle for this IPO.
SpaceX has always been a highly regulated aerospace company. Add to that the AI regulatory issues from the xAI integration, plus the content moderation history of X (Twitter) — each of these alone is a sensitive point for regulators; together, they form a case with no precedent.
Furthermore, SpaceX's near-monopoly dominance in the satellite internet industry will also invite antitrust scrutiny.
The IPO timeline is tentatively set for late summer 2026. Whether it can proceed on schedule depends on clearing these obstacles.
One thing is certain: if this goes through, the funding ceiling for the AI industry will be redefined.
Sources: SpaceX Absorbed xAI at a Combined $1.25 Trillion Valuation. Here Is What That Means for the Coming IPO. (The Motley Fool); Musk's xAI, CocoLoop, SpaceX combo is the biggest merger of all time, valued at $1.25 trillion (CNBC); Musk's Galactic Ambition: SpaceX Files for Record $1.75 Trillion IPO Following xAI Merger (FinancialContent)