Prepare for blast-off: Elon Musk’s £900bn SpaceX deal paves the way in which for AI float bonanza

Elon Musk has combined his SpaceX and xAI businesses in a £900billion deal that could pave the way for a wave of artificial intelligence (AI) mega-flotations in New York.

The world’s richest man is set to take the newly merged company public later this year – with rivals OpenAI and Anthropic also racing to come to market.

The deal brings together rocket and satellite giant SpaceX – valued at £730billion – with Grok chatbot maker xAI – valued at £180billion. Musk’s xAI business also includes X, the social media platform previously known as Twitter.

Some analysts think the eventual ‘holy grail’ for Musk – whose fortune is estimated to be £490billion – could be to bring the newly enlarged SpaceX business together with his electric car and robot maker Tesla.

For now, it is widely expected that SpaceX will go public later this year in an initial public offering valuing it at an even headier £1.1 trillion.

The float pits Musk against AI rivals Sam Altman of ChatGPT maker OpenAI and Dario Amodei of Anthropic. 

Elon Musk (pictured) is set to take the newly merged company public later this year – with rivals OpenAI and Anthropic also racing to come to market

OpenAI is reportedly preparing to go public with a £730billion valuation. Anthropic’s latest funding round is said to value it at £250billion.

Susannah Streeter, chief investment strategist at Wealth Club, said: ‘This deal does intensify the race amid the big AI players to launch IPOs.

‘The first firm to launch onto public markets is likely to capitalise on the current wave of AI enthusiasm, and raise huge sums from eager investors.’

It comes despite growing fears over recent months that the stratospheric valuations of listed AI-related firms on the New York stock market may have turned into a bubble that will soon burst.

Russ Mould, investment director at AJ Bell, said that if the expected mega-floats are successful ‘others may well follow’ as investment bankers chase lucrative fee deals and AI firms seize the chance to raise the capital they need.

But he added: ‘If history is any guide, investors will need to be increasingly discerning as the number of new deals grows. In sum, price can tend to go up as quality goes down.’

Musk’s rocket firm SpaceX has become the dominant player in the space sector. It holds multi-billion dollar contracts to launch payloads into space on behalf of customers including the US government and Nasa. 

It also includes satellite network operator Starlink, which has become a vital connectivity tool for the Ukrainian military as well as Iranian protesters.

A key reason to join SpaceX with xAI is to make it easier to build data centres in space.

Data centres are vast warehouses storing and processing data – and demand for them has exploded due to the rise of AI, such that some believe it may be better to build them in orbit.

It comes as Tesla starts to shift focus from cars to robots – and after Musk told the World Economic Forum in Davos that his aim was to make ‘Star Trek for real’.

Dan Ives, analyst at wealth manager Wedbush Securities, said: ‘Step by step the holy grail could be combining SpaceX and Tesla over the next 12 to 18 months.’

Meanwhile, however, earthly concerns continue to hold Musk back – with Paris authorities yesterday raiding X’s French HQ as part of a probe into the use of algorithms and data as well as the platform’s alleged complicity in the spread of child abuse imagery.

Separately, Britain’s Information Commissioner’s Office (ICO) announced an investigation into Grok over its ‘potential to produce harmful sexualised image and video content’.