Economy / February 4, 2026
The tech mogul and future space pioneer is once again crushing his properties in a deal that’s unlikely to achieve escape velocity.
Elon Musk peddles his vision of cosmic colonization at the World Economic Forum in Davos, Switzerland.
(Fabrice Cofrini / AFP via Getty Images) After surely very intense negotiations with himself, Elon Musk decided to merge his rocket company SpaceX with his AI and social media company xAI in a $1.25 trillion tie-up. Combining two of his companies into a new mega-corporation supposedly worth more than the sum of its overvalued parts is a classic Musk move. His latest self-merger coup I came last year when he combined X and xAI. Alongside frequent capital increases, Musk’s vertically integrated buyouts of his own properties allow him to continue to inflate the value of his start-ups. In December, SpaceX was valued at $800 billion. Less than two months later, for the purposes of this deal, it was valued at $1 trillion, with xAI estimated at $250 billion.
SpaceX closed the deal by issuing $250 billion in new shares that it delivered to xAI shareholders. This decision effectively diluted the holdings of existing SpaceX shareholders. The New York Times summary the deal is perilous: “Longtime supporters of SpaceX were forced to significantly reduce their stake in the company, percentage-wise, to pay for the acquisition. »
This would infuriate most investors, but thanks to the circular nature of Musk’s business economy – otherwise known as Muskonomy – and his frequent reliance on the same group of financiers, some of SpaceX’s investors were already xAI investors. (SpaceX is also expected to raise at least $50 billion in a public offering this summer.) Creating new SpaceX shares is meant to support the overall company while sparing Musk the trouble of pursuing more conventional ownership models that involve real dollars.
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Tesla is Musk’s only publicly traded company, but all of his companies do business with each other, share staff and investors, and are otherwise increasingly closely linked. Just a few months ago, Musk proposed initiatives for Tesla and SpaceX to invest billions in xAI. Some have suggested that his many businesses will one day be consolidated under a single Musk Corp, which Musk will be able to oversee with the imperiousness, shuffling of resources and ad hoc financial engineering that can generously be described as his management style.
Musk’s periodic mergers and internal dealings may seem like attempts to force synergies that don’t exist while hiding the enormous costs of building data centers and SpaceX’s failed Starship tests, among other boondoggles. Musk says his imagined future depends on a vertically integrated company running rockets, space exploration, a free speech platform, data centers and artificial intelligence. But his alchemical approach to mergers reveals the overall fragility of his corporate empire, which is increasingly exploited to support a few big bets – AI, robotics, autonomous vehicles, space exploration – that may never yield big profits. The overlapping missions of companies anchored in Muskonomy also create extremely harmful fallout, such as the transformation of Platform Earlier this week, French prosecutors carried out a search at X’s Paris headquarters targeting the nasty feature, while a UK investigation into Grok’s predatory imagery is underway.
In a memo to employees published on The SpaceX websiteMusk described his new company’s mission as “scaling up to create a sentient sun to understand the Universe and extend the light of consciousness to the stars!” » To this end, he wants to start installing data centers in space, where they could operate with fewer restrictions than their terrestrial counterparts. More importantly, in space lord Musk’s vision of the future, they would have unlimited access to the sun’s generous rays.
It’s an idea that has gained followers among a number of tech leaders over the past year, including Jeff Bezos, who has long talked about putting infrastructure in Earth’s orbit. SpaceX says it now plans to launch 1 million satellites as part of a huge “constellation” of AI data centers with huge solar panels. Rolling out one of his typically improbable timelines, Musk said he believes he can start launching data centers into space within two or three years.
For Musk, building this fantastic collection of space data centers is an essential step in allowing humanity to “significantly climb the Kardashev ladder and harness a significant percentage of the power of the Sun.” After spending the past several decades hatching improbable plans to colonize Mars, Musk has recently taken to singing about rapidly conquering the Kardashev Scale, an esoteric system for measuring a civilization’s technological progress designed by a Soviet scientist in the 1960s. In recent years, Silicon Valley figures have adopted the Kardashev Scale as a measure of their cosmos-wide ambitions. According to the Kardashev scale, a civilization progresses based on the amount of energy it consumes, with a Type II civilization – Musk’s stated goal – being able to harness all the energy emitted by a nearby star.
The sci-fi retrofuturism at work here is above all a smokescreen that rationalizes tech billionaires’ continued plunder of planet Earth’s limited resources. The necessary equipment, which has not yet been created, should be replaced or increased every five years. The potential waste is as obscene as the billions of dollars of capital currently lavished on building terrestrial data centers. The ability to launch data centers into space depends on a massive drop in the cost of rocket launches, far beyond the scale that SpaceX or any of its competitors have managed to achieve. None of this is really financially feasible.
As Musk inflates his technology forecasts, his big bets are converging because his costs are exploding. Last month, xAI announced that it had raised $20 billion. Since last year, xAI has reportedly been in operation 1 billion dollars per month. The AI boom is underpinned by ever-larger capital injections supporting ever-greater promises of technological innovation. From super intelligence to universal wealth to space data centers, the industry’s projects are incredibly expensive and always well beyond the next horizon.
Musk’s main talent in recent years has been keeping the whirlwind moving while periodically appealing to the same tight circle of venture capitalists, Middle Eastern sovereign wealth funds and political patrons who help subsidize his torrid entrepreneurship. One day, this machine – and whatever deal Musk made with his backers – will collapse. But Elon Musk’s latest contortion will probably have the effect, as expected, of further delaying this day of reckoning.
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Jacob Silverman Jacob Silverman is the most recent author of Gilded Rage: Elon Musk and the radicalization of Silicon Valley. He is also the host of Understood: making muska limited series of podcasts from CBC.