Jessica Mendoza

So what does SpaceX get from this merger?

That's after the break.

Out of all of Musk's private companies, SpaceX is by far the most valuable.

The company develops cutting-edge space technology like Starlink, a satellite network that provides internet connectivity.

And of course, there's SpaceX rockets.

They're some of the most advanced in the world and backed by billions of dollars in government contracts.

Even before it acquired XAI, SpaceX was already a customer and an investor in the AI startup.

According to people familiar with the matter, SpaceX uses a custom version of the XAI chatbot Grok, which is known internally as Spock.

SpaceX also invested $2 billion in XAI last summer.

But despite the rocket company's involvement with XAI, actually combining the two companies has been the subject of intense discussion for people close to SpaceX.

It was late last year that work on the deal picked up steam, according to recent Wall Street Journal reporting.

At that point, the idea of combining SpaceX and XAI became a priority for people in Musk's inner circle.

Soon, SpaceX executives were selling the company's new focus on AI satellites to banks and investors, people familiar with the discussion said.

On January 31st, SpaceX and XAI signed a merger agreement that created a $1.25 trillion company.

The deal closed two days later.

Now, with SpaceX reportedly set to debut on the stock market in the coming months, executives at the mega company and Elon Musk have to sell their vision to the public.

Is this risky for the valuation of SpaceX?

Will it change anything about its plan to go public, if at all?

It's not unusual for a more established, profitable company to buy a small startup with a lot of potential but not a lot of revenue.

But Berber says this acquisition is different, in part because Musk owns both companies, so investors might see it as a conflicted transaction.