Yesterday, news came out that two Elon Musk-led companies, SpaceX and xAI were merging. We conduct research across many aspects of the now-combined company and believe the combination makes it much more likely that the xAI part will receive continued, robust funding to build numerous data centers in the future. Here are some of the implications:
- For our broadband and LEO-related research, the Starlink part of SpaceX, which we understand is a very significant driver of the SpaceX part’s revenue, we think the widely-reported 2026 IPO will make it more likely that the space constellation continues to expand. As the constellation expands, we anticipate that lower-population-density broadband users will be better served, making terrestrial broadband investments less attractive.
- For our RAN research, we anticipate that an improved LEO constellation and potentially better-financed spectrum acquisitions will make Starlink’s LEO-based 3GPP cellular offerings more competitive. As Starlink’s 3GPP offerings become more competitive, as we expect for broadband, making terrestrial RAN “tower” investments in rural areas will yield lower financial returns.
- For our Data Center-related research, we anticipate that xAI-related investments will remain robust, as part of the $1T Data Center Capital Spending trend we track in our Cloud & AI-related research. While it is hard to quantify the opportunity for space-based data centers that Mr. Musk has pointed out as part of the combined company’s plans, it is certainly possible that, as NVIDIA has changed the buildout of data centers, SpaceX/xAI could drive very significant computing and networking innovations.