Investor Gene Munster of Deepwater Asset Management says that billionaire Elon Musk's orbital datacenter ambition is a focal point of the SpaceX–xAI merger.
Datacenters In The Sky
In a video shared on the social media platform X on Monday, following the merger announcement, Munster said that the "most important vector" for the merger was "datacenters in the sky." He added that space-based datacenters benefitted from having "better access to solar [energy]" and do not need cooling, making them "much more efficient."
"The second advantage is there are no boundaries, like a terrestrial boundary," Munster said. He outlined Starlink's role in providing internet access in Iran as well as Ukraine. "Datacenter with no boundaries has a similar appeal to it," he said, sharing that space-based datacenters could be free from geopolitical headwinds.
Bringing The Best Companies Together
Munster called SpaceX the best company to put objects into space and hailed xAI as the best company "in terms of scaling up datacenters." He shared that xAI's Colossus datacenter has 200,000 Nvidia Corp.(NASDAQ:NVDA) GPUs, adding that it has "a lot of muscle" when it comes to building datacenters.
Speaking about the financials, Munster highlighted that SpaceX's IPO, which will reportedly take place in June this year, could give Musk flexibility to fund AI development for xAI.
He then shared that the merger also helps Musk's ambitions to build the most valuable company on Earth, which no other company can target. "The target is basically Nvidia, that's about $4.5 trillion," Munster said.
New Acronym For MAG 7
Munster then shared that the SpaceX-xAI entity could be valued at around $1.2 trillion. "I guess we'll have to come up with a new acronym for the MAG 7 here when SpaceX-xAI enters the fold," he said at the end.
Investor Ross Gerber, who is the co-founder of investment firm Gerber Kawasaki, has questioned Musk’s strategy of having his companies merge. Gerber questioned the sustainability of such a strategy, implying that xAI merged with SpaceX due to cash problems.
xAI had earlier reported a loss of $1.46 billion during third-quarter 2025, spending aprroximately $7.8 billion during the first nine months of the year. The startup generated $107 million in revenue during Q3.
Tesla-SpaceX Merger?
It’s worth noting that reports also speculate that Musk could also be eyeing a possible merger between SpaceX and Tesla with the billionaire’s cryptic post from last year, possibly hinting at such an event when Musk spoke about “convergence” of his enterprises.
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