SpaceX-xAI merger announced: How does the mega deal affect Elon Musk's net worth?

Elon Musk has announced that he is combining SpaceX and xAI, his cash-burning artificial intelligence venture, in a deal that values the enlarged entity at $1.25 trillion.

The deal, which comes amid his push to prioritise AI and space exploration, signals a change within Elon Musk's corporate empire.

Musk said SpaceX was acquiring xAI to develop data centres in space, which he says is an escape from the constraints on Earth.

The deal values SpaceX at $1 trillion and xAI at $250 billion, according to Bloomberg and Reuters, who cited people familiar with the matter.

How does SpaceX-xAI merger affect Elon Musk's net worth?

The SpaceX-xAI merger, announced on Monday, will change how Musk's enormous wealth takes shape.

Till now, Tesla has been the source of the world's richest person's liquid wealth. The EV maker, which is listed on stock exchanges, has a market cap of about $1.58 trillion. This is about 26% more than the stated private-market valuation of SpaceX at $1.25 trillion, as per CNBC.

Musk owns about a 43% stake in SpaceX, as compared to only a 13% stake in Tesla. This now means SpaceX accounts for more than half of Musk’s paper wealth, according to CNBC.

At the time of writing this article, Musk's net worth was pegged at $852.5 billion by the Forbes Real Time Billionaires Index.

Tesla's market value has been declining since the start of the year, with the stock down 6% year to date.

On the contrary, SpaceX gives Musk a much stronger market position.

The space company is one of the leading providers of orbital launch services and has billions in deals and contracts with NASA and the US Department of Defense. Additionally, the SpaceX IPO, set to launch this year, will reportedly value the company even more and further increase Musk's wealth, CNBC reported.

Musk had previously opposed an IPO for SpaceX because he had not enjoyed the required scrutiny of publicly traded Tesla.

What Elon Musk said about SpaceX-xAI merger

Musk wrote on the SpaceX website Monday that the SpaceX-xAI merger, further entwining his business interests, would create “the most ambitious, vertically-integrated innovation engine on (and off) Earth”.

He cited capabilities in “AI, rockets, space-based internet, direct-to-mobile device communications and the world's foremost real-time information and free speech platform”.

Musk called SpaceX's absorption of xAI “not just the next chapter, but the next book” in what he said was the company's "mission" to “make a sentient sun”.