SpaceX–xAI Merger Gives Grok Capital, Scale, and Political Weight

For Elon Musk, the merger of SpaceX and xAI was not just a corporate reshuffle, but an attempt to dramatically scale his own AI ecosystem using the resources of the most expensive private startup in the world.

The deal, finalized on February 2, combined companies with a total valuation of about $1.25 trillion and made SpaceX the managing partner of xAI Holding, which already includes the social network X. For comparison, the upcoming Discord IPO is estimated to have a capitalization of no more than $30 billion. More broadly, the IPO calendar for the second half of the year is dominated by companies an order of magnitude smaller, which makes Musk’s internal consolidation stand out even against the backdrop of a reviving public market. This is formally the internal consolidation of Musk’s assets, but in practice, it is about creating a financial and infrastructural foundation for the accelerated development of xAI in the race with OpenAI and other market players.

For Musk, this structure makes sense, as SpaceX remains a highly profitable business with revenue of $15-16 billion per year and significant profits, while xAI is an extremely capital-intensive project that requires ongoing investments in computing power, data, and personnel. The billionaire himself does not hide that he considers SpaceX a potential donor to the AI sector and, in the future, potentially a platform for more exotic ideas, such as placing data centers in space. Analysts, however, note that such an intertwining of a US government space contractor and an AI startup with foreign investments is almost certain to attract regulators’ attention.

In this context, it becomes clearer why xAI has simultaneously launched an aggressive hunt for the human gold standard for content. The company has opened vacancies for professional writers, journalists, and screenwriters with experience in top publications and studios, as well as with Oscar, Emmy, and Hugo awards. Paying up to $125 per hour highlights the seriousness of these intentions. Grok needs not just a large array of texts, but reference material that can improve the style, logic, and security of the model’s responses. This is especially true after a series of high-profile scandals involving toxic and frankly problematic chatbot generations, which have already led to its suspension in a number of countries.

The practical return on such investments is beginning to manifest itself at the product level. xAI has introduced the largest update to the Grok Imagine 1.0 video generator, which can now create videos up to 10 seconds long in 720p resolution with synchronized sound. The neural network has learned how to handle clarifying prompts, add emotional voices to characters, and automatically adjust music to the visual content. Over the past month, the service has generated more than a billion videos, and the API model shows strong results in specialized benchmarks, which indicates the rapidly growing popularity of the tool.

As a result, a complete picture emerges: SpaceX provides xAI with money, scale, and political weight; xAI invests in data quality and talent; and Grok is gradually evolving from a scandalous chatbot into a full-fledged multimodal platform. In addition, this merger is believed to be valuable for the SpaceX IPO, expected later this year.

Whether this strategy remains sustainable in the long term largely depends on regulators’ patience and Musk’s ability to maintain a balance among ambition, security, and economics. But in the short term, the combined structure has clearly received a powerful boost to growth.

Frequently Asked Questions

Why did Elon Musk merge SpaceX with xAI?

The merger creates a financial powerhouse where the steady profits of SpaceX can fund the expensive development of xAI. By combining these assets into a $1.25 trillion ecosystem, Musk can share massive computing resources and engineering talent across his companies. This structure provides the stable foundation needed to compete with other major artificial intelligence labs like OpenAI.

How does a satellite company help develop a better chatbot?

SpaceX provides xAI with more than just money; it offers a massive physical infrastructure and the potential for space-based data centers. In the future, putting servers in orbit could offer unique cooling advantages and solar power for training large models. This vertical integration allows xAI to scale its hardware faster than competitors who rely on traditional cloud providers.

Why is xAI hiring professional writers with Oscar and Emmy awards?

The company is aggressively hunting for “human gold standard” content to improve how its Grok model speaks and thinks. Award-winning writers and screenwriters provide high-quality reference material that helps the neural network master style, logic, and emotional depth. This human-led training is specifically designed to stop the chatbot from generating toxic or problematic responses.

What are the new capabilities of the Grok Imagine 1.0 video generator?

The latest update allows Grok to create high-definition 720p videos up to 10 seconds long with fully synchronized sound. Users can use clarifying prompts to adjust the scene, and the AI can even add emotional voices to characters and original music that matches the visual mood. It signals a shift from simple text bots to a complete multimodal platform for creators.

Is the SpaceX and xAI merger likely to face legal or regulatory issues?

Yes, analysts expect high scrutiny because SpaceX is a major government contractor handling sensitive U.S. space missions. Combining a federal contractor with an AI startup that has foreign investment raises complex questions about national security and data privacy. Regulators will likely investigate how these overlapping interests affect government projects and market competition.

Will this merger impact the expected SpaceX IPO later this year?

The consolidation of xAI and the X social network under the SpaceX umbrella makes the upcoming IPO much more complex and potentially more valuable. Investors aren’t just buying into a rocket company; they are buying into a massive AI and data ecosystem. This broader reach could lead to a much higher valuation when the company eventually goes public.

How does xAI’s approach to data quality differ from other AI companies?

While many companies scrape the entire internet for data, xAI is focusing on high-end human expertise by paying professionals up to $125 per hour for specialized content. This “quality over quantity” strategy aims to build a more sophisticated and reliable model that understands professional standards. It moves away from the “noisy” data of the open web to curated, expert-level training.

Can AI really be trained by screenwriters to be more “human”?

Screenwriters and journalists bring a deep understanding of narrative structure and audience engagement that raw data lacks. By using their work as a reference, xAI can teach its models how to handle nuance and complex human emotions. This makes the AI feel more interactive and less like a robotic search engine during long conversations.

Is Grok still suspended in certain countries due to its content?

Grok has faced suspensions and heavy criticism in various regions because of generations that were viewed as toxic or biased. The aggressive move to hire professional content creators is a direct attempt to fix these safety flaws. Better training data is the primary tool the company is using to meet the strict security and ethics standards required by international regulators.

What should business owners do now to prepare for Musk’s new AI ecosystem?

Creators and businesses should watch for the release of new xAI developer tools and APIs that leverage this massive new infrastructure. As Grok becomes more multimodal, it will offer unique ways to generate high-end video and audio content for marketing and social media. Staying ahead of these tool updates on platforms like X can give your brand a competitive edge in AI-driven storytelling.