SpaceX Acquires ‎‎xAI For The AI Infrastructure Era ⁠

The SpaceX + xAI Merger Is About Vertical Integration

On February 2, 2026, SpaceX announced the acquisition of xAI, vertically integrating launch, compute, and AI models into a single platform. The largest bottleneck facing AI scale could be power. By integrating launch, energy, and AI under one platform, SpaceX could be attempting to engineer around Earth’s constraints. If Starship achieves full reusability and sub-$100/kg launch costs, orbital data centers operating at scale could become ~25% less expensive than terrestrial compute.

AI’s Bottleneck Is Power, Not Algorithms

Scaling terrestrial compute faces increasing friction. Today’s AI power demands face:

• Multi-year nuclear construction timelines
• “Sold out” gas turbines through the decade
• Grid interconnection queues exceeding five years
• Community opposition to large-scale, behind-the-meter data centers

While demand for AI tokens continues to rise, access to power is gating supply. When terrestrial infrastructure becomes the constraint, orbital data centers merit consideration.

Why Space Could Work

Our research suggests that SpaceX has reduced launch costs by ~95% since 2008 to under ~$1,000/kg via the Falcon 9, a trajectory that fully reusable Starship could extend to sub-$100/kg, as shown below.

At that threshold, orbital data centers could deliver ~25% lower compute costs at scale while also offering benefits that terrestrial solutions cannot provide:

• Near-continuous solar energy in sun-synchronous orbit
• No grid interconnection delays
• No local permitting friction

Source: The timeline for achieving scale is uncertain due to numerous variables. Wright’s Law states that for every cumulative doubling of units produced, costs will fall by a constant percentage. See Winton 2019. ARK Investment Management LLC, 2026, based on data from Roberts 2022, Sheetz 2022, and Kirtland 2023.¹ In addition to those sources, certain information presented may be the result of ARK’s internal analyses, which draw on various additional sources of information. For informational purposes only and should not be considered investment advice or a recommendation to buy, sell, or hold any particular security. Past performance is not indicative of future results. Forecasts are inherently limited and cannot be relied upon. 

Conclusion

In our view, the SpaceX + xAI merger establishes vertically integrated launch, power, and AI, positioning SpaceX to control a critical bottleneck in the AI era: access to scalable, low-cost compute. If Starship achieves full reusability and orbital data centers at scale, the economics of AI infrastructure could shift decisively. Infrastructure ownership has defined prior technological revolutions, and it might just do so again. 

Importantly, our current SpaceX valuation model reflects research on Starlink and includes no contribution from orbital data centers. In our view, that lacuna leaves meaningful potential upside beyond our base case.

---

For investors seeking exposure to SpaceX, the ARK Venture Fund provides access. 

Learn more about the ARK Venture Fund.

Important Information

Holdings subject to change. Not a recommendation to buy, sell, or hold any specific security.

BEFORE INVESTING YOU SHOULD CAREFULLY CONSIDER THE FUND’S INVESTMENT OBJECTIVES, RISKS, CHARGES AND EXPENSES. THIS AND OTHER INFORMATION IS IN THE PROSPECTUS, A COPY OF WHICH MAY BE OBTAINED HERE. PLEASE READ THE PROSPECTUS CAREFULLY BEFORE YOU INVEST.

There is no assurance that the Fund will meet its investment objective. The value of your investment in the Fund, as well as the amount of return you receive on your investment in the Fund, may fluctuate significantly. You may lose part or all of your investment in the Fund or your investment may not perform as well as other similar investments. Therefore, you should consider carefully the risks at the bottom of this page before investing in the Fund.

Cash flow is the net amount of cash and cash equivalents moving into and out of a business, project, or financial account over a specific period.

ARK Investment Management LLC is the investment adviser to the ARK Venture Fund.

Foreside Fund Services, LLC, distributor.