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.
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