US space stocks rise after Musk's SpaceX merges with xAI at $1.25 trillion valuation

• Space stocks rallied with Rocket Lab and Planet Labs up 3%, Redwire up 4.9%, and several others posting gains of 1-2% in premarket trading
• The merger combines AI, rocket technology, satellite internet, and communications into a vertically integrated entity, with SpaceX recently requesting permission to launch solar-powered satellites for AI data centers
• Seraphim Space CEO called it 'the strongest validation yet that space will be the backbone of the next wave of AI' as global space tech investment accelerates

Summary: US Space Stocks Rally on SpaceX-xAI Merger Announcement

Key Development:

Elon Musk announced the merger of SpaceX and xAI, valuing the combined entity at $1.25 trillion. The deal unites two of the world's largest privately held companies, aiming to expand AI infrastructure into space.

Market Impact:

U.S. space sector stocks rose in premarket trading on Tuesday:

• Rocket Lab and Planet Labs: up ~3%
• AST SpaceMobile: +2.4%
• Intuitive Machines: +2.1%
• Globalstar: +1.3%
• Redwire: +4.9%

Strategic Vision:

Musk projects that space-based AI compute will become the most cost-effective option within 2-3 years as tech companies pursue artificial general intelligence (AGI). The merger creates a vertically integrated powerhouse combining AI, rocket technology, space-based internet (Starlink), direct-to-mobile communications, and information platforms.

IPO Plans:

SpaceX is preparing for a potential IPO this year that could value the company at over $1.5 trillion, potentially making it the largest public offering ever. xAI was previously valued separately, though specific figures weren't disclosed in the article.

Industry Context:

Global space technology investment is accelerating, driven by government defense spending on satellite systems and private sector launch capacity investments. SpaceX recently requested permission to launch solar-powered satellites for AI data centers, addressing growing electricity and cooling demands from terrestrial data centers.

Expert Commentary:

Seraphim Space CEO Mark Boggett called this "the strongest validation yet that space will be the backbone of the next wave of AI," signaling significant confidence in space-based infrastructure's role in future AI development.