Software is HOT 🔥 Hardware is Still COOL 🧊
1 min readSpaceX acquires xAI in record-setting deal as Musk looks to unify AI and space ambitions
The deal, first reported by Reuters last week, represents one of the most ambitious tie-ups in the technology sector yet, combining a space-and-defense contractor with a fast-growing AI developer whose costs are largely driven by chips, data centers and energy. It could also bolster SpaceX’s data-center ambitions as Musk competes with rivals like Alphabet’s Google, Meta, Amazon, Anthropic and OpenAI in the AI sector.
Shaun’s Take:
SpaceX acquiring xAI isn’t just merging two companies, it’s signalling that AI’s bottlenecks are shifting from “model quality” to “physical compute scale.” Capital is now being steered into hardware infrastructure (rockets, satellites, power systems, orbital data centers) rather than predominantly into software development and cloud GPU costs. This can pull funding away from purely software/ads models and into long-tail, capital-intensive infrastructure investments.