Quick overview

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SpaceX is thinking about merging with Tesla Inc. as well as a different merger with the artificial intelligence company xAI, a sign that billionaire Elon Musk is considering ways to strengthen his empire, according to people with knowledge of the situation.

The company has discussed the viability of a partnership between SpaceX and Tesla, an idea that some investors are promoting.

According to some of the sources, they are also looking into a partnership between SpaceX and xAI before an IPO. An infrastructure fund and Middle Eastern sovereign investors could show a significant amount of interest in any deal. According to one of them, a deal might also need a significant financing component.

According to the people, no final decisions have been made, details may change, and the companies may choose to stay apart. Requests for comment from Musk and representatives of SpaceX, xAI, and Tesla were not immediately answered.

The different scenarios could support different aspects of Musk’s ambitious plan for SpaceX, which involves the company launching data centers into space to perform complex computing for AI.

If SpaceX can make the engineering work, xAI could gain a great deal from the computing power offered by its data centers in orbit. SpaceX may be able to use solar energy in space to power its data centers thanks to Tesla’s capacity to produce energy storage devices.

Musk has also talked about sending Tesla’s Optimus robots to Mars and the moon using SpaceX’s Starship rockets. Tesla shares increased by as much as 4.5%. The company’s market value was approximately $1.56 trillion after the stock dropped 3.5 percent during regular business hours.