SpaceX and xAI Merger Rumors: Joe Lonsdale Weighs in on Elon Musk’s Next Big Move

Tech entrepreneur and investor Joe Lonsdale, co-founder of Palantir, has shared his thoughts on the growing speculation about a potential SpaceX–xAI merger. While Lonsdale acknowledges there is logic behind the idea, he’s urging caution and emphasizing collaboration over consolidation.

Lonsdale, whose net worth is estimated at $3 billion and who manages more than $6 billion through his venture capital firm 8VC, is a respected voice in tech and AI circles. His take sheds light on how industry insiders view Elon Musk’s sprawling business empire.

Why a SpaceX–xAI Tie-Up Is on the Radar

Rumors of a merger have gained traction because of the natural overlap between space, satellite technology, and artificial intelligence.

• Starlink, SpaceX’s satellite internet service, could provide xAI with an unparalleled distribution network, helping scale AI services quickly.
• Musk’s ventures in AI and space technology are increasingly intertwined, hinting at future synergies with NASA collaborations or space-based compute platforms.

Despite the potential, Lonsdale is not fully endorsing a mega-merger, noting that focused, separate teams often outperform when it comes to building scale.

Musk’s Expanding Business Empire

Elon Musk’s operations cover a wide array of industries, all interconnected by technology, data, and ambition:

• Tesla: Electric vehicles, energy storage, solar, autonomous driving software, and robotics like Optimus.
• SpaceX: Private rocket company, Starship, Starlink, and Mars exploration plans.
• xAI: AI venture behind the Grok chatbot and large language models, competing with OpenAI and Anthropic, also controlling X (formerly Twitter).
• Neuralink: Neurotechnology company working on implantable chips for cognitive enhancement.
• The Boring Company: Infrastructure and tunneling projects aimed at easing urban congestion.

Lonsdale notes that SpaceX’s mission-driven engineering culture complements xAI’s massive demand for compute, but he warns that merging all ventures under one roof could dilute focus.

SpaceX Economics and Market Potential

SpaceX is now a robust business, with recent reports indicating $15–16 billion in sales last year and nearly $8 billion in EBITDA. Much of this comes from Starlink, which has grown into the company’s financial backbone, now serving over 9 million users worldwide.

The company is also investing in wireless spectrum and satellite infrastructure, with the goal of scaling its services. Analysts estimate that the global space economy could reach $1.8 trillion by 2035, with the satellite internet market alone projected to hit $22.4 billion by the end of the decade.

xAI’s Growth and Real-World Traction

xAI is making waves, but not without financial challenges.

• Grok Chatbot: Nearly 64 million monthly users as of September 2025, demonstrating that the platform is moving beyond a niche experiment.
• Leaderboard Performance: Ranked second in the crowdsourced Text Arena leaderboard, showing competitive performance among AI models.
• Government Contracts: xAI won up to $200 million from the Pentagon for agentic AI workflows and signed a major deal with the U.S. General Services Administration.
• Global Partnerships: Agreement with Saudi Arabia’s HUMAIN for hyperscale GPU data centers and nationwide deployment of Grok.

Despite these wins, xAI faces major financial pressures. Reports indicate quarterly sales of $107 million, but losses of $1.46 billion, with $7.8 billion burned in just nine months as it scales operations.

Lonsdale’s Take: Collaboration Over Consolidation

According to Lonsdale, the key to Musk’s empire is focus, not forcing all businesses under one umbrella.

• Synergy Exists: SpaceX and xAI complement each other in tech and infrastructure.
• Separate Teams Work Best: Lonsdale emphasizes that individual ventures can scale more effectively when they remain distinct.

He acknowledges that Musk is heavily involved in xAI’s operations, ensuring rapid growth and attention to detail, but cautions against merging everything prematurely.

Financial and Strategic Implications

Merging SpaceX with xAI could provide extraordinary opportunities, including:

• Leveraging Starlink as a global AI distribution network.
• Integrating AI with space-based computing and satellite technologies.
• Enhancing both companies’ global reach and revenue potential.

However, risks are significant, particularly given xAI’s massive cash burn and the complexity of managing multiple high-growth ventures simultaneously.

Lonsdale’s perspective suggests that while collaboration could unlock synergies, Musk’s empire may benefit more from keeping ventures independent while exploring joint projects.

What Investors Are Watching

Investors are closely monitoring:

• SpaceX IPO: Current valuation around $800 billion, potentially exceeding $1 trillion by mid-2026, with $50 billion expected to be raised.
• xAI Funding: Recently raised $20 billion at a $230 billion valuation, with SpaceX investing $2 billion.
• Global AI and Space Markets: Rapidly growing demand for AI compute power, satellite internet, and next-gen infrastructure.

The combination of these factors makes the potential for strategic partnership compelling, but Lonsdale’s caution reflects the complexity of Musk’s sprawling empire.

Final Thoughts

While the buzz around a SpaceX–xAI merger is real, Joe Lonsdale’s take is clear: focus and collaboration matter more than consolidation. Musk’s ventures are growing at unprecedented rates, but keeping them agile and mission-driven may be more effective than merging everything under a single corporate roof.

The next year will be critical, as SpaceX moves toward a potential IPO and xAI continues scaling its AI services. Whether Musk opts for a merger or maintains separate growth paths, the tech world will be watching closely.