Elon Musk’s SpaceX acquired xAI in a record-setting transaction aimed at expanding AI computing capacity, including potential space-based data centers powered by solar energy.

Musk’s merger of SpaceX and xAI turns a future IPO into a bet on space-based data centers and a $1.25 trillion vision for AI compute beyond the planet. Elon Musk is merging his rocket maker SpaceX with his artificial intelligence startup xAI in a deal that changes what a future SpaceX IPO represents.

Elon Musk is combining SpaceX and xAI in a deal that values the enlarged entity at $1.25 trillion, as the world’s richest man looks to fuel his increasingly costly ambitions in artificial intelligence and space exploration.

SpaceX acquired xAI to create a company valued at $1.25 trillion, SpaceX announced. Al Root, an associate editor at Barron's, joins with more.

SpaceX and xAI did not immediately respond to a request for comment from Business Insider. XAI plans to hold an all-hands in the coming days and host trainings related to the merger, the internal memo said.

The merger puts the billionaire entrepreneur’s rocket and artificial-intelligence companies under one roof.

The list of broken promises Musk has made about fantastical technological achievements leaves a lot of room for doubt.

The IPO is expected to generate tens of billions of dollars, giving xAI a new source of funds. Musk also says the arrangement is meant to pave the way for space-based data centers, days after SpaceX filed a plan to operate up to one million satellites for the project.