Elon Musk, chief executive officer of Tesla Inc., during the US-Saudi Investment Forum at the Kennedy Center in Washington, DC, US, on Wednesday, Nov. 19, 2025.
Elon Musk said a primary reason for merging SpaceX with his artificial intelligence startup, xAI, is to more effectively build "orbital data centers." That's for a far-off future.
For now, xAI has a much more pressing need: cash.
In Monday's blog post announcing the combination of his two companies, Musk estimated that "within 2 to 3 years, the lowest cost way to generate AI compute will be in space." But xAI requires immense amounts of money to finance its massive infrastructure buildout as the three-year-old company tries to catch up to Google , OpenAI and Anthropic in the booming generative AI market.
SpaceX, which is reportedly aiming to go public this year in what could be a record-setting IPO, may represent Musk's clearest path to landing that capital. The company is looking to raise up to $50 billion at a valuation as high as $1.5 trillion, according to Reuters.
A major key to SpaceX's growth is Starlink, its satellite internet service, which has around 9,000 satellites in orbit today and roughly 9 million customers. It recently received authorization from the Federal Communications Commission to put another 7,500 satellites into orbit.
Tim Farrar, president of satellite and telecom industry research firm TMF Associates, said SpaceX can't put that kind of money to work towards its existing business because there are only so many rocket launches available to get its Starlink satellites up into space each year.
Folding xAI into SpaceX, Farrar said, allows Musk to capitalize on investors' insatiable appetite for AI holdings, while also securing the AI company's financial position despite its mounting losses. According to a report from The Information late Monday, xAI has told investors that it burned about $9.5 billion through the first nine months of 2025.
"People are throwing tens of billions of dollars at AI companies right now, and in six months or 12 months time, they might have changed their mind about it," Farrar said. "Getting the money is feasible" now but may not be forever.