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In a massive consolidation of Elon Musk’s business empire, SpaceX has acquired artificial intelligence startup xAI in an all-stock transaction that values the combined entity at $1.25 trillion. The merger, announced ahead of a highly anticipated SpaceX initial public offering later this year, aims to create a unified technology stack integrating launch capabilities, satellite connectivity, consumer AI, and social media data.
Key Points
- Merger Valuation: SpaceX acquires xAI in an all-stock deal, creating a $1.25 trillion giant ahead of a 2026 IPO.
- Orbital Strategy: The company plans to launch "orbital data centers," utilizing Starship for heavy lift and Starlink for low-latency connectivity to run AI compute in space.
- Gaming Milestone: The original Nintendo Switch has officially surpassed the DS to become Nintendo’s best-selling console of all time with 155.37 million units sold.
- Regulatory Pressure: French prosecutors have searched X’s Paris offices as part of an investigation into data extraction and deepfake content.
The "Single Stack" Strategy: AI Takes Orbit
The acquisition brings Musk’s disparate ventures—SpaceX’s launch and internet infrastructure, xAI’s Grok and Aurora models, and the X social platform—under a single corporate umbrella. According to reports from Ars Technica, the strategic driver behind this consolidation is the development of space-based data centers.
The combined company aims to leverage Starship’s immense payload capacity to deploy compute hardware into orbit, bypassing terrestrial limitations on energy and land use. By utilizing solar energy in space, the company intends to create a high-volume AI processing network independent of ground-based power grids.
"The goal is to create a single stack that covers launch, connectivity, data, and consumer AI services. Musk wants to put AI compute into orbit and do it at high volume with Starship and Starlink as the core enablers."
To support this infrastructure, SpaceX has filed with the FCC to launch up to 1 million satellites serving as orbital data center nodes. The plan includes a "Stargaze" tracking system to mitigate collision risks in Low Earth Orbit (LEO). Musk has projected a rapid scaling of operations, targeting hourly Starship flights with 200-ton payloads to achieve 100 gigawatts of orbit-launched compute capacity annually.
Logistical and Physical Challenges
While the strategy promises distinct advantages—specifically low-latency links via Starlink and "wholesale" launch costs—it faces significant physical hurdles. Engineers must solve for heat dissipation in a vacuum, radiation shielding for sensitive GPUs, and the complexities of hardware upgrades in orbit.
Furthermore, the initiative is positioned as a geopolitical counter-measure. Musk has reportedly argued that China’s current AI advantage stems from abundant, cheap terrestrial solar power. By moving data centers to orbit, SpaceX aims to secure constant solar exposure, though analysts note the supply chain for solar components remains heavily reliant on Chinese manufacturing.
Nintendo Breaks Sales Records
In the gaming sector, Nintendo has achieved a historic milestone. The original Switch console has sold 155.37 million units, officially surpassing the Nintendo DS (154.02 million) to become the company’s best-selling hardware of all time. The console is now closing in on the industry-wide record held by the PlayStation 2, which stands at approximately 160 million units.
Simultaneously, the successor console, dubbed the "Switch 2," is performing strongly following its June 2025 launch. The new device moved 7.1 million units in the recent quarter, bringing its total to 17.37 million—surpassing the lifetime sales of the Wii U in under a year.
Regulatory Scrutiny Intensifies for X
As X (formerly Twitter) is folded into the aerospace giant, it faces escalating legal challenges in Europe. French prosecutors recently conducted a search of X’s Paris offices regarding suspected unlawful data extraction and complicity in the distribution of non-consensual deepfake content. This probe, which began in January 2025, involves both the platform's recommendation algorithms and the Grok chatbot.
In the UK, Ofcom has labeled its investigation into Grok’s handling of personal data a "matter of urgency." The regulator is coordinating with French authorities to determine if the platform has sufficient safeguards against the creation of illegal imagery.
Market Shifts and Executive Moves
The technology and finance sectors are seeing significant leadership changes this quarter:
- Disney: Josh D’Amaro, Chairman of Disney Experiences, has been named the next CEO, set to replace Bob Iger in March 2026.
- PayPal: Alex Chriss has stepped down as CEO following weak performance; he is succeeded by Enrique Lores, formerly the head of HP.
- Firefox: Mozilla is introducing an AI "kill switch" in Firefox 148 (releasing February 24), allowing users to disable all integrated AI features, including chatbots and translation tools.
- Hardware Costs: Raspberry Pi announced its second price hike in two months, adding $10 to $60 per board due to rising RAM costs.
As SpaceX prepares for its public offering later this year, the market will be watching to see if the integration of a social media platform and a generative AI model into an aerospace company can deliver the projected synergies, or if the regulatory baggage of X will weigh down the launch provider's valuation.
