Elon Musk to Merge SpaceX and xAI

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Here's your morning brief for Tuesday, February 3rd. I'm Daniel Bach for The Wall Street Journal. Elon Musk is merging SpaceX and XAI, forming a $1.25 trillion company. The merger was confirmed in a memo by Musk posted by SpaceX, which brings together the mature rocket and satellite business with his AI startup that is facing steep competition.

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The move was unexpected, as industry observers had anticipated that XAI would merge with Tesla instead. SpaceX invested $2 billion into XAI last year, while Tesla committed to invest the same amount in the AI startup last week.

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Shares in Palantir Technologies surged overnight on the back of record fourth-quarter revenue.

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The 70% jump in earnings was fueled by an increase in U.S. government demand for its AI tools. While that government connection is the company's primary growth engine, it's also a double-edged sword, as contracts with ICE draw criticism from lawmakers.

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And on Capitol Hill, Republican House Speaker Mike Johnson says that he has the votes to end a partial government shutdown as soon as today, passing a bill that would fund the government for the rest of the fiscal year, but the Department of Homeland Security for just two weeks.

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That short-term extension is designed to provide time for a bipartisan deal to be reached on stricter policies for immigration enforcement agents. one of those demands that federal officers wear body cameras is being partially addressed by the administration. Homeland Security Secretary Kristi Noem says that officers in Minneapolis will receive body cams effective immediately.