U.S. Space Stocks Rally Following Elon Musk’s SpaceX, xAI Merger
In Focus
- The merger values the combined entity at $1.25 trillion
- Intuitive Machines stock surged 4.7% in premarket trading
- Musk says space will be the most cost-effective way to generate AI compute
U.S. space stocks have surged after Elon Musk’s merger announcement. In what is seen as a major push to expand AI infrastructure outside Earth, Elon Musk said SpaceX would merge with xAI. According to Yahoo Finance, the merger values the combined entity at $1.25 trillion.
Among the stocks that soared following the SpaceX-xAI merger valuation was Intuitive Machines, which gained 4.7%. Planet Labs and Rocket Lab gained about 1.2% and 3.9% respectively in premarket trading. Shares of AST SpaceMobile and Redwire also rose by 4.3% and 2% respectively.
Musk’s Vertical Powerhouse Ambitions
Announcing the SpaceX merger, Elon Musk said it is aimed at creating an ambitious, vertically integrated innovation powerhouse that combines rocket technology, AI, and space-based internet connectivity. The powerhouse also includes direct-to-mobile communications and a free speech platform.
According to Musk, space will be the most cost-effective way to generate AI compute over the next two to three years as tech companies pursue artificial general intelligence (AGI). AGI is a theoretical concept where machines surpass human thinking.
“Others may buy into Musk’s grand vision of data centres in the cosmos, and this may only whet the appetite ahead of what could be the largest IPO of all time,” Investment Director at AJ Bell, Russ Mould noted as cited by Yahoo Finance.
U.S. space stocks rose after the Musk merger as Starlink, which is part of SpaceX, plans a satellite orbit change to boost space safety. Starlink currently has close to 10,000 satellites orbiting the Earth.
Merging the World’s Largest Private Firms
Musk’s SpaceX and xAI merger brings together two of the largest private companies in the world. The merger comes at a time when SpaceX is preparing for an IPO that will likely value it at over $1.5 trillion.
Analysts have suggested that the SpaceX IPO, which is expected in the first half of 2026, could attract high demand from retail investors. xAI’s valuation stood at about $230 billion in November 2025.
The social media company is currently facing widespread probe over publication of explicit images generated by Grok.
Space Tech Investment Set to Grow
Globally, investment in space technology is set to increase this year. This growth is driven by private sector investment in satellite launch. Recently, Jeff Bezos’ Blue Origin announced plans to launch 5,408 satellites into space to create a new communications network. Space investments are also being driven by government spending on satellite systems to boost defense.
“This is the strongest validation yet that space will be the backbone of the next wave of AI,” Seraphim Space CEO, Mark Boggett as per Yahoo Finance.
SpaceX is seeking permission to launch a million satellites to space as it seeks to address the rising need for data centers. These AI facilities have increased demand for electricity. The constellation of satellites would tap energy from the sun to power AI data centers.
