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new video loaded: The Web of Companies Owned by Elon Musk
By Kirsten Grind, Melanie Bencosme, James Surdam and Sean Havey
February 27, 2026
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Kirsten Grind, Melanie Bencosme, James Surdam and Sean Havey
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If your phone heats up while running AI, imagine what happens inside a massive data center. Now imagine moving that data center into orbit.
That is exactly what China and Elon Musk are planning. It is a serious race to build space-based AI data centers powered by sunlight in space.
At stake? The future of artificial intelligence, energy dominance and who controls the next layer of digital infrastructure.
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China and Elon Musk are racing to build solar-powered AI data centers in orbit, aiming to ease Earth’s growing energy strain. (Paul Hennesy/Anadolu via Getty Images)
China’s main space contractor, China Aerospace Science and Technology Corporation, outlined a five-year plan to build what it calls “gigawatt-class space digital-intelligence infrastructure,” according to reporting cited by CCTV. While that phrase may sound bureaucratic. It is not.
Gigawatt-class means massive energy output. Think industrial scale. These proposed orbital hubs would integrate cloud, edge and device-level computing. In simple terms, data collected on Earth could be processed in space instead of inside giant warehouses in Arizona or Inner Mongolia.
The vision goes even further. A December policy document describes an industrial-scale “Space Cloud” by 2030. The goal is deep integration of computing power, storage and transmission bandwidth, all powered by solar energy in orbit. China also signaled that space-based solar power tied to AI computing will be a core pillar of its upcoming 15th Five-Year Plan. It’s all part of its national strategy.
Meanwhile, Elon Musk is making a similar bet. At the World Economic Forum in Davos, Musk said SpaceX plans to launch solar-powered AI data center satellites within two to three years. He argued that space is the “lowest-cost place to put AI” and predicted that it will be true within a few years. Why? Solar power in orbit can generate far more energy than panels on the ground. Musk said orbital solar generation can produce roughly five times more power because there are no clouds and no night cycles in the same way as on Earth. SpaceX reportedly expects to use funds from a planned $25 billion IPO to help develop these orbital AI systems.
This makes sense when you consider that AI is devouring electricity. Training and running large models requires enormous computing clusters. Power grids are straining in places like Texas and Northern Virginia. So the thinking is simple. If Earth runs short on clean energy for AI, move the servers closer to the sun.
There is only one problem. Getting hardware into space is expensive. SpaceX solved part of that with its Falcon 9 reusable rocket. Reusability dramatically lowers launch costs. It also enabled SpaceX’s Starlink satellite network to dominate low Earth orbit.
China, on the other hand, has not yet completed a fully successful reusable rocket program capable of repeated, reliable flights. That is a major bottleneck. Without reusability, the cost of launching and maintaining space-based AI infrastructure remains high.
Still, China achieved a record 93 space launches last year, according to official announcements. Its commercial space startups are maturing quickly. And Beijing has made it clear it wants to become a “world-leading space power” by 2045. In other words, this is a long game.
ARTIFICIAL INTELLIGENCE HELPS FUEL NEW ENERGY SOURCES
Beijing plans a “gigawatt-class” space computing network as part of its long-term strategy for digital and space dominance. (Gabriel V. Cardenas/AFP via Getty Images)
China’s five-year plan also includes suborbital space tourism and the gradual development of orbital tourism. That signals a broader push to commercialize space in a way similar to civil aviation.
At the same time, both the U.S. and China see strategic and military advantages in dominating orbit. China recently inaugurated its first School of Interstellar Navigation within the Chinese Academy of Sciences. The goal is to move from near-Earth orbit to deep space exploration. State media described the next 10 to 20 years as a window for leapfrog development in interstellar navigation.
Meanwhile, the U.S. is racing to return astronauts to the moon for the first time since the Apollo era. The competition is heating up on multiple fronts. AI infrastructure in space is just one piece of a much larger chessboard.
You might be thinking, “Great. Billionaires and governments are fighting over satellites. Why should I care?” Here is why. AI is becoming embedded in everything. Search results. Customer service. Medical imaging. Financial systems. Smart homes. All of that runs on computing power. And that computing power runs on energy. If the cheapest and most abundant energy for AI ends up being in orbit, the balance of tech power could shift dramatically. Countries that control space-based AI infrastructure could gain economic leverage, military advantages and technological dominance. This is the next layer of the cloud. Not in a warehouse. Not in a desert. But circling above your head.
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CHINA QUIETLY BUILDS WORLDWIDE SPACE NETWORK, ALARMING US OVER FUTURE MILITARY POWER
Musk says space will soon be the lowest-cost place to power artificial intelligence, citing constant solar energy in orbit. (Aubrey Gemignani/NASA via Getty Images)
For decades, space was about flags and footprints. Today, the focus is shifting toward servers and solar arrays as governments and private companies rethink where the world’s most powerful computers should operate. China is pursuing a “Space Cloud,” while Elon Musk argues that AI belongs in orbit. Both are racing toward a future where advanced computing systems are powered by uninterrupted sunlight above Earth. That shift sounds bold and carries real risk. However, if AI continues to accelerate and energy demand keeps climbing, moving computing infrastructure into space may start to look less radical and more inevitable.
If the infrastructure powering AI moves into orbit, who should control it? Let us know by writing to us at Cyberguy.com.
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In our increasingly enshittified online experience, the last bastions of the Internet’s initial egalitarian promise shine like diamonds. These holdout Golden Era vestiges somehow remain useful and unadulterated by corporate greed, while under constant siege for their recalcitrance. The crown jewel of these stalwarts is Wikipedia. Sustained by a legion of volunteer editors and beg-a-thon donations since 2001, the humble open-source encyclopedia is generally regarded as our best effort yet to amass the sum of all human knowledge. Free, citation-filled, and perpetually self-auditing, it’s no wonder so many consider the online encyclopedia to be one of the few wonders of the digital world.
Beyond an incalculable benefit to humans, this font of free information has also made model-training a whole lot easier for AI companies. But once Wikipedia-trained models began spitting out facts that comported with reality’s well-known liberal bias and pierced the industry’s echo chamber bubble, some were displeased. Cognitive dissonance now at the wheel, they declared Wikipedia yet another victim of the “woke mind virus” and set out to build their own Library of Alexandria. Leading the charge in this crusade is Elon Musk, who launched an AI-powered competitor, Grokipedia, last October.
While speaking at India’s AI Impact Summit in New Delhi this week, Wikipedia co-founder and spokesperson Jimmy Wales was asked about the threat the site faced from Grokipedia and its ilk. Unbothered, he dismissed the xAI project as “a cartoon imitation of an encyclopedia.”
Wales went on to champion the humans behind Wikipedia—and the mastery and due diligence they provide—as key ingredients to the site’s success.
“Why do I go to Wikipedia? I go to Wikipedia because it’s human-vetted knowledge,” explained Wales. “We would not consider for a second today letting an AI just write Wikipedia articles because we know how bad they can be.”
Wales described the propensity for AI models to “hallucinate” erroneous, misleading, or tangential information as their primary disqualifying factor. And he’s not wrong. A 2025 OpenAI study showed even their advanced models were still hallucinating at rates as high as 79% in some tests.
As Wales explained, these sorts of errors become even more common and apparent when AI is asked to delve increasingly deeper into a subject—one that may already be niche. Where AI models fail here, their human counterparts shine. Wales touted these subject-matter experts—the “obsessives”—as the best guards against inaccuracies and providers for optimal knowledge-seeking experiences.
“That sort of full, rich human context of understanding is actually quite important in terms of really understanding both what does the reader want and what does the reader need,” said Wales.
If anything, Wales did Grokipedia a kindness by keeping the conversation hallucination-focused. Plenty of journalists and critics have already dug into the many controversies arising from Musk’s white nationalist, navel-gazing facsimile.
Even with Wikipedia still being the universally agreed-upon ark of earthly info, a larger issue remains. We aren’t arguing over a shared reality anymore. With Grokipedia, a distinctly rival one has been created. And the more who use it, the further we get from ever fusing our two worlds back together.
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Justin Caffier
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Tareq Amin, CEO of Saudi Arabia’s largest A.I. company, Humain, has been on a dealmaking blitz since taking the helm of the Kingdom’s national A.I. initiative last year. His latest move: a $3 billion investment in Elon Musk’s xAI. The investment was made during xAI’s $20 billion fundraising round in January, Humain announced today (Feb. 18). The raise came just weeks before xAI merged with Musk’s SpaceX earlier this month, as Musk consolidates his A.I., communications and space ambitions ahead of a widely anticipated IPO.
Founded in 2025 by Crown Prince Mohammed Bin Salman and backed by Saudi Arabia’s massive sovereign wealth fund, the Public Investment Fund. Humain sits at the center of the Kingdom’s push to diversify its economy beyond oil. A core part of that mandate: building sovereign A.I. infrastructure at home.
The xAI stake is the latest example of Humain’s ability to “deploy meaningful capital behind exceptional opportunities where long-term vision, technical excellence and execution converge,” said Amin in a statement. Amin, who previously led Aramco Digital and Japan’s Rakuten Mobile, has spent the past several months striking blockbuster partnerships with U.S. tech heavyweights, including Nvidia, AMD, Cisco, Amazon Web Services and Groq (not xAI’s chatbot Grok).
Humain did not respond to requests for comment from Observer.
Most of the partnerships are focused on expanding Saudi Arabia’s data center footprint and compute capacity. A joint venture with AMD and Cisco, for example, aims to build domestic A.I. infrastructure capable of powering up to one gigawatt.
xAI’s relationship with Humain dates back to November, when the companies unveiled plans for a 500-megawatt data center in Saudi Arabia. The facility—xAI’s first outside the U.S.—will run on Nvidia chips and deploy the company’s Grok models across the Kingdom.
Humain’s deepening ties to xAI underscore a broader realignment in global A.I. alliances, with Gulf states emerging as critical capital providers and infrastructure hubs for American developers. In November, Humain and the United Arab Emirates’ A.I. company, G42, received U.S. approval to acquire up to 35,000 advanced A.I. chips each, marking a sharp reversal from earlier semiconductor export restrictions.
Other regional players are also forging closer links with U.S. firms. G42 secured a $1.5 billion investment from Microsoft and is set to help develop Stargate UAE, an A.I. compute cluster in Abu Dhabi to be operated by OpenAI and Oracle.
The Emirati-backed MGX has participated in large fundraising rounds for xAI, OpenAI and Anthropic, while Qatar’s sovereign wealth fund earlier this week joined Anthropic’s new $380 billion Series G financing—further cementing the Middle East’s growing influence over the future of A.I.
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Alexandra Tremayne-Pengelly
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Elon Musk’s SpaceX is bidding for a secretive contract to build swarms of voice-controlled drones for the US military. The Pentagon has launched a $100m (£74m) competition to develop an AI bot that can be used to translate voice or written commands from soldiers to a fleet of drones. Mr Musk’s SpaceX is one of the companies pitching for a share of the work, Bloomberg reported. OpenAI, the developer of ChatGPT, is also said to be working with US autonomous vehicles business, Applied Intuition, on a rival bid. Telegraph
Tech companies are conflating traditional artificial intelligence with generative AI when claiming the energy-hungry technology could help avert climate breakdown, according to a report. Most claims that AI can help avert climate breakdown refer to machine learning and not the energy-hungry chatbots and image generation tools driving the sector’s explosive growth of gas-guzzling datacentres.. The research, commissioned by nonprofits including Beyond Fossil Fuels and Climate Action Against Disinformation, did not find a single example where popular tools were leading to a “material, verifiable, and substantial” reduction in planet-heating emissions. The Guardian
Late last year, Ultrahuman’s best smart rings were banned from the US as part of the fallout from a patent dispute with Oura. At the time, Ultrahuman said that “A new ring design is already in development” – and a newly published regulatory filing suggests that this product is almost upon us. As reported by Gadgets & Wearables, the Ultrahuman Ring Pro has just been revealed in paperwork filed with the FCC in the US. The filing lists several specifications of the new device and suggests that Ultrahuman has made changes to avoid infringing the patents that got its previous products banned. Tech Radar
Tech bosses, politicians, scientists, academics and campaigners are meeting at the AI Impact Summit in India this week for top-level discussions about what the world should be doing to try to guide the AI revolution in the right direction. It has kicked off not just with long queues and confusion for some delegates, but also conflicting reports about whether keynote speaker Bill Gates would appear. Reports overnight suggested the Microsoft founder – who has faced questions after appearing in the Epstein files – would no longer be addressing the Summit. BBC
Ofcom has granted the UK’s first licence to provide direct-to-cell satellite communications to Virgin Media O2, paving the way for the operator to launch services in the next few months. Although technically it is not a new licence, but rather a variation on the mobile operator’s existing concession, as per the new rules finalised by the regulator at the back end of last year. The regulations are set to come into force on 25 February. “We have now inserted the frequencies on which the company is allowed to provide D2D services and formally made the regulations that allow existing handsets to use the service,” Ofcom said, in a brief statement. Telecoms.com
Apple today announced a “special Apple Experience” in New York, London, and Shanghai, taking place on March 4, 2026 at 9:00am ET.
Apple invited select members of the media to the event in three major cities around the world. It is simply described as a “special Apple Experience,” and there is no further information about what it may entail. The invitation features a 3D Apple logo design composed of yellow, green, and blue discs. It is notable that Apple is specifically using the word “experience,” rather than “event.” Unlike a full live-streamed event from Apple Park, the March 4 event in other cities is likely to be smaller in scale. Tech Radar
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Chris Price
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Threads users have complained about its recommendation algorithm since the dawn of time 2023. Users even started writing posts addressed to the algorithm, specifying the topics they wanted to see more of. Now, that’s part of the system: Users can write a post that begins with “dear algo” to adjust their preferences, officially.
For example, you could write: “Dear algo, show me more posts about sous vide recipes.” You can also ask to see fewer posts about topics you don’t want to see, like “Dear algo, stop showing me posts about air fryers.” You can even retweet other users’ “dear algo” posts to have those topics reflected in your feed. “Dear algo” posts will work for Threads users in the US, UK, Australia and New Zealand, with more countries coming “soon.”
— Mat Smith
The biggest stories in tech you might have missed.
With a bigger focus on the Moon, Elon Musk is making some wild new plans. According to audio heard by The New York Times, Musk said xAI needed to build an AI satellite factory on the Moon with a gigantic catapult to launch the satellites into space. Sometimes you just want to be the Bond villain.
“You have to go to the Moon” to build the required AI capabilities, Musk told employees. “It’s difficult to imagine what an intelligence of that scale would think about, but it’s going to be incredibly exciting to see it happen.” Such a catapult would certainly need to be powerful — though the Moon has only one-sixth Earth’s gravity, the minimum escape velocity required for orbit is still around 3,800 mph, or five times the speed of sound. That’s currently possible with electromagnetic railguns, but the satellites would have to withstand that force.
TMA (Nintendo)
In a bid to distract from a lot of things, Nintendo’s new Pokémon game is a gently paced game where, instead of playing as a generic trainer, you take control of a sole Ditto.
As a Ditto, you can transform into other Pokémon, though the process is sort of incomplete, meaning you can only learn one skill from the monsters you befriend. Instead of using tools, you can transform into other Pokémon (like Lapras or Dragonite) to use their abilities to traverse obstacles or shape the world around you.
TMA (Engadget)
Sony unveiled the latest entry in its best wireless earbud series, the WF-1000XM6, featuring yet another redesign, both inside and out. Once again, strong features and audio performance remain, but competition from all sides is tougher than ever. As Billy Steele explains in his review, if you want the strongest active noise cancellation, that will be Bose’s QuietComfort Ultra Earbuds. If the best sound quality is your goal, the Technics AZ100 is your best bet in this price range. I’ll also mention Sennheiser’s Momentum True Wireless 4, which offers great sound quality, respectable ANC and a comfier fit than the M6. The WF-1000XM6 is available now for $330.
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Mat Smith
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Just days after Elon Musk merged his A.I. startup, xAI, with SpaceX in preparation for a widely anticipated trillion-dollar IPO later this year, two of xAI’s founding employees—Yuhuai (Tony) Wu and Jimmy Ba—announced their resignations. That means half of xAI’s founding team has now left the company barely three years after its launch. Musk framed the staff exodus as growing pains. “As a company grows, especially as quickly as xAI, the structure must evolve just like any living organism. This unfortunately required parting ways with some people. We wish them well in future endeavors,” he wrote on X yesterday (Feb. 11).
Wu and Ba’s exits appeared amicable. But lower-level employees have been more candid about internal tensions at the Musk-run startup. Several members of xAI’s technical staff have also left in recent weeks, according to their posts on X and LinkedIn.
“All A.I. labs are building the exact same thing, and it’s boring,” said Vahid Kazemi, who worked on xAI’s audio models, in a post on X. “I think there’s room for more creativity. So, I’m starting something new.”
In an interview with NBC News, Kazemi also criticized the company’s working culture, saying he regularly worked 12-hour days, including holidays and weekends.
Launched in March 2023 with a roster of industry veterans from companies like OpenAI, Google, Microsoft, and Tesla, xAI will now operate as a wholly owned subsidiary of SpaceX. The new iteration of SpaceX faces no shortage of challenges: Grok continues to face legal scrutiny, while Musk’s leadership style remains a point of contention.
Here are the co-founders and notable leaders who have left xAI so far—and where they are now.
Jimmy Ba, who led A.I. safety at xAI, announced his exit on Feb. 10. A professor at the University of Toronto who studied under A.I. pioneer Geoffrey Hinton, Ba’s research played a key role in shaping Grok’s development.
“So proud of what the xAI team has done and will continue to stay close as a friend of the team,” Ba wrote on X. He hasn’t announced his next move, but added that “2026 is gonna be insane and likely the busiest (and most consequential) year for the future of our species.”
Despite Ba’s departure, Dan Hendrycks, executive director of the nonprofit Center for AI Safety, remains a safety advisor for xAI.
Tony Wu, a former research scientist at Google and postdoctoral researcher at Stanford University, announced his departure from xAI on Feb. 9.
Wu led xAI’s reasoning team. “It’s time for my next chapter…It is an era with full possibilities: a small team armed with AIs can move mountains and redefine what’s possible,” he wrote on X.
Wu has not disclosed his next role. Co-founders Guodong Zhang and Manuel Kroiss remain at xAI and are helping lead the company’s reorganization.
While not a founding member, Mike Liberatore joined xAI as chief financial officer in April 2025, just one month after xAI acquired X in a deal that valued the combined company at $113 billion.
Liberatore, formerly a finance executive at Airbnb and SquareTrade, left after only three months. He now works as a business finance officer at OpenAI, according to LinkedIn.
Musk replaced Liberatore with ex-Morgan Stanley banker Anthony Armstrong. Armstrong advised Musk on his Twitter (now X) acquisition in 2022 and later served as a senior advisor at the Office of Personnel Management during Musk’s controversial tenure at the Department of Government Efficiency (DOGE).
Greg Yang spent nearly six years as a researcher at Microsoft before joining xAI’s founding team. He left the company in January due to health complications from Lyme disease.
“Likely I contracted Lyme a long time ago, but until I pushed myself hard building xAI and weakened my immune system, the symptoms weren’t noticeable,” Yang wrote on X. He continues to advise xAI in an informal capacity.
Igor Babuschkin, a former research engineer at OpenAI and Google DeepMind, was a co-founder and key engineering lead at xAI. Widely known as the primary developer behind Grok, Babuschkin left in July 2025 to start his own venture capital firm, Babuschkin Ventures, focused on A.I. research and startups.
Christian Szegedy spent 12 years at Google before joining xAI as a founding research scientist. He left xAI in February 2025 to become chief scientist at superintelligence cloud company Morph Labs.
More than a year later, he departed that role to found mathematical A.I. startup Math Inc. in September, according to his LinkedIn.
“I left xAI in the last week of February and I am on good terms with the team. IMO, xAI has a bright future,” Szegedy wrote on X.
Other senior engineers and scientists at xAI include Yasemin Yesiltepe, Zhuoyi (Zoey) Huang and Yao Fu.
Kyle Kosic left OpenAI in early 2023 after two years to co-found xAI, where he served as engineering infrastructure lead. He departed about a year later, in April 2024, to return to OpenAI as a technical staff member.
Kosic was the first co-founder to leave xAI and did not issue a public statement. It is unclear who now leads xAI’s engineering infrastructure, though another co-founder, Ross Nordeen, remains the company’s technical program manager after previously holding the same role at Tesla.
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Rachel Curry
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At the risk of stating the obvious, Elon Musk doesn’t always make sense when he talks. But at a recent all-hands meeting at xAI that was posted in full online, he made less sense than usual. This isn’t investment advice, but anyone considering buying stock in the SpaceX/xAI conglomerate expected to make an initial public offering later this year might want to give some real thought to how the founder and CEO is sounding lately.
xAI has seen a rash of high-level resignations recently. Many of the company’s 11 original cofounders have left, and one of these resignations, Tony Wu’s, happened just yesterday.
Musk reportedly hopes to raise $50 billion from investors once SpaceX with xAI is a publicly traded company, and there’s very real potential that retirement and pension funds will soon be among those holding a stake in this venture. Judging from his latest speech, the aims of this venture involve building a sci-fi catapult on the moon, discovering ancient aliens, and consuming an ever-greater percentage of the sun’s energy for some reason.
And it would be one thing if any of this were being communicated coherently. Jeff Bezos has made similarly bizarre statements about realizing the fantasies of 70s sci-fi writers, but—and trust me when I mean this as only the faintest of praise—at least Bezos’ thoughts held together when he said it, and at least he says this sort of thing on podcasts rather than during a speech delivered directly to his employees.
As I wrote last week, Musk is working hard to make the merger between SpaceX, which is mostly a rocket company, and xAI, which is mostly a software company, make sense. A coherent version of his pitch for SpaceX and xAI as a single company might hang entirely on his idea—harebrained as it might arguably be—that data centers in orbit are necessary for the advancement of AI model training, and that only in space can all these data centers maximize solar exposure for energy, and minimize the effort required to cool them.
But Musk’s pitch involves the inverse of this concept too, or at least tries to invert the concept in a sweaty, high-effort, ultimately unclear way. If I earnestly do my best to make Musk’s speech make sense, he seems to be arguing that only through the merger of xAI and SpaceX can the concept of intelligence—artificial or otherwise—collect and benefit from hypothetical knowledge of space in all its vastness, including what can be gleaned from aliens, or through excavating the remnants of extinct aliens.
And that’s not to mention his seemingly unrelated preoccupation with harnessing a larger and larger percentage of the sun’s energy—a logical carbuncle glued randomly onto the entire pitch. He seems to be approaching a fun concept from futurism called the Kardashev Scale that measures the advancement of civilizations, but he never manages to land that rhetorical plane.
But don’t take it from me that this all makes no sense. Again, with an IPO looming, you owe it to yourself to read the entire section of his speech about the future of xAI and SpaceX, which I’ve transcribed verbatim here, minus the ums and uhs.
NEWS: xAI has just publicly posted the full 45 minute all-hands meeting that Elon Musk had with employees recently.pic.twitter.com/zw4WFdeKvV
— Sawyer Merritt (@SawyerMerritt) February 11, 2026
(This is a transcript of everything from 41 minutes and 35 seconds in the video until the end.)
“In order to expand the universe, you must explore the universe.
There’s only so much you can learn from just being on earth, with telescopes and colliders on Earth. Ultimately you have to go out there and you have to explore the universe. To understand it. And that’s the motivation behind the combination of SpaceX and xAI. It’s to accelerate humanity’s future in understanding universe, and extending the light of consciousness to the stars.
So in the grand scheme of things when you look at how much energy Earth is actually using for civilization, we’re only right now using, quote, roughly one percent of the potential energy of Earth. And if we wanted to use even a millionth of the sun’s energy, that would be roughly a million times more energy than civilization currently uses. The only way to access that energy—the energy of the sun—is to extend beyond Earth.
Earth is really a tiny, tiny dust mote in a vast darkness. The sun is 99.8% of all mass in the solar system. So you have to expand beyond the tiny dust mote that is Earth to make any significant dent in using the sun’s energy. Like said, it’s—you’d have to expand roughly a million times just to get to one millionth of our sun’s energy. And then, going beyond that, exploring—extending—to the galaxy, and maybe someday even to other galaxies.
So the—the next step beyond Earth data centers are Earth orbital data centers, and we’ll be launching, with SpaceX, orbital data centers at the 100 to 200 gigawatt per year level. Not cumulative. I mean per year. And ultimately, we see a path to maybe launching as much as a terawatt per year of compute from earth.
But what if you want to go beyond a mere terawatt per year? In order to do that you have to go to the moon.
So, by having factories on the moon, building AI satellites, and having a mass driver—which is the kinda thing you really only learn about in, read about in, science fiction, but we’re gonna make it real—we’re actually gonna have a mass driver on the moon. And if you do that, you can go several orders of magnitude greater. You can go to 1,000 gigawatts or more per year, and ultimately get to maybe a millionth, and then, maybe a thousandth, and maybe even a few percent of the sun’s energy.
It’s difficult to imagine what an intelligence of that scale would think about, but it’s gonna be incredibly exciting to see it happen. I really wanna see the mass driver on the moon that is shooting AI satellites into deep space. Just going like “shoom, shoom,” just one after the other. I can’t imagine anything more epic than a mass driver on the moon, and a self-sustaining city on the moon, and then going beyond the moon to Mars, going throughout our solar system, and ultimately being out there among the stars, and visiting all these star systems.
Maybe we’ll meet aliens. Maybe we’ll see some civilizations that lasted for millions of years. And we’ll find the remnants of ancient alien civilizations. But the only way we’re gonna do that is if we go out there and we explore. And this is a path to making it happen. Thank you.”
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Mike Pearl
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On Wednesday, xAI took the rare step of publishing a full 45-minute all-hands meeting video on X, making it publicly accessible. Details of the Tuesday night meeting were previously reported by The New York Times, which may have influenced xAI’s decision to post the video online.
The full video reveals significant new details about Musk’s plans for the AI lab, including its product roadmap and its ongoing ties to the X platform.
The most immediate revelation concerned a string of departing employees, which Musk described as layoffs resulting from a changing organizational structure at the company. While reorganizations are common, the breadth of the departures has caused significant confusion, particularly as it has meant the loss of a significant portion of the founding team.
“As a company grows, especially as quickly as xAI, the structure must evolve,” Musk said on X. “This unfortunately required parting ways with some people. We wish them well in future endeavors.”
The new organizational system splits xAI into four primary teams: one focused on the Grok chatbot (including voice), another for the app’s coding system, another for the Imagine video generator, and finally a team focused on the Macrohard project, which spans from simple computer use simulation to modeling entire corporations.
“[Macrohard] is able to do anything on a computer that a computer is able to do,” Toby Pohlen, who will lead the project under the new organizational structure, told his colleagues. “There should be rocket engines fully designed by AI.”
The all-hands also featured claims about new usage and revenue figures for xAI and X. Nikita Bier, X’s head of product, said X had “just crossed” $1 billion in annual recurring revenue from subscriptions, which he attributed to a marketing push during the holidays.
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Additionally, executives said the xAI’s Imagine tool is generating 50 million videos a day, and more than 6 billion images over the past 30 days, according to their internal metrics.
But it’s difficult to separate those figures from the flood of deepfake pornography that overtook X during that same period. The X platform saw engagement skyrocket as AI-generated explicit images became more prevalent, and with an estimated 1.8 million sexualized images generated over just nine days, the image-generation figures likely include substantial amounts of this controversial content.
The most eye-catching part of the presentation came at the end, when Musk reemphasized the importance of space-based data centers despite the technical challenges involved. Musk went still further, envisioning a moon-based factory for AI satellites, including a lunar mass driver — essentially an electromagnetic catapult — to launch them. With such infrastructure, Musk said, one could launch an AI cluster capable of capturing significant portions of the sun’s total energy output or even expanding to other galaxies.
“It’s difficult to imagine what an intelligence of that scale would think about,” Musk said, “but it’s going to be incredibly exciting to see it happen.”
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Russell Brandom
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Elon Musk has spent recent days on his social media site X trying to explain why he exchanged so many emails with Jeffrey Epstein. The billionaire Tesla CEO insists that Epstein was the one pursuing him. But the more Musk explains, and the more emails are surfaced from the gigantic cache of so-called Epstein files, the stranger his defense seems to get.
Musk has denied any wrongdoing and says he never went to Epstein’s private island in the Caribbean, known as Little St. James. And while there doesn’t seem to be any concrete evidence that Musk went to the island, it’s pretty clear from the emails that Musk was itching to party with Epstein. Musk was engaged in long back and forth chats in 2012, 2013, and 2014 about a visit to the island.
A series of emails from Dec. 2012 that talks about a “ratio” at Epstein’s parties is particularly concerning, if only because it’s not entirely clear what he means. Musk talked about bringing his then-wife Talulah Riley, the British actress who he was married to from 2010-2012 and then again from 2013-2016.
Epstein: you are welcome to stay or just come for the day, plenty of rroom i will=send heli to get you
Musk: Do you have any parties planned? I’ve been working to the edge of sanity th=s year and so, once my kids head home after Christmas, I really want to hi= the party scene in St Barts or elsewhere and let loose. The invitation is=much appreciated, but a peaceful island experience is the opposite of what=l’m looking for.
Epstein: Understood, , I will see you on st Barth, the ratio on my island might m=ke Talilah uncomfortable
Musk: Ratio is not a problem for Talulah
In other emails from Nov. 2012, Musk asks “What day/night will be the wildest party on =our island?”
Ever since the new Epstein files were released on Jan. 30, roughly 3.5 million pages in total, Musk has also been going back and forth with LinkedIn founder Reid Hoffman online, each man accusing the other of being more implicated by the files.
“The big difference between you and me, Reid, is that you went and I did not. In fact, you went multiple times. First time was maybe a mistake, but not the second time you went,” Musk wrote.
“And, as the email shows, I obviously didn’t anticipate anything actually shady, as I was bringing my wife at the time (Talulah). Nonetheless, UNLIKE YOU, I came to my senses and declined to go. Epstein tried to get me to go to his island so many times that eventually I just blocked him,” Musk continued in another tweet.
The phrasing here is curious, obviously. What does Musk mean that he came to his senses?
Does it imply that Musk always knew Epstein was engaged in child sex trafficking, wanted to party with him, and then decided against it? Or does it mean that Musk only learned in the process of emailing back and forth in 2012, 2013, and 2014 that Epstein was a predator, which then changed Musk’s mind about hanging out with him?
So many things that Musk says can be confusing, largely because he’s not a reliable narrator of his own actions. The billionaire previously wrote in Sept. 2025 that he “refused” to go to Epstein’s island, though the emails we now have don’t suggest that at all. What the publicly available emails show is that Musk and Epstein were communicating about hanging out.
Even if you don’t count a potential visit to the island, there were other communications between the men about other meet-ups, including one from February 2013 that refers to a “facility,” where Epstein says he’ll bring four “assistants.”
Again, Musk denies any wrongdoing. But it seems like every time he decides to chime in on the controversy, things get a little more weird. And it’s not just about Epstein. Early Wednesday morning, Musk responded to a tweet from a user called @PubWanghaf.
“It breaks my heart to say but in order to save this country we are probably going to have to do things that make women sad :(” the X user wrote.
Musk responded with “true words,” without elaborating.
True words
— Elon Musk (@elonmusk) February 4, 2026
What the hell are you talking about, man?
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Matt Novak
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Women working in tech and financial services are at greater risk of losing their jobs to increased use of AI and automation than their male peers, according to a report that found experienced females were also being sidelined as a result of “rigid hiring processes”. “Mid-career” women – with at least five years’ experience – are being overlooked for digital roles in the tech and financial and professional services sectors, where they are traditionally underrepresented, according to the report by the City of London Corporation. Guardian
Russian spacecraft have intercepted the communications of at least a dozen key satellites over Europe, security officials said. Such interceptions not only risk compromising sensitive information transmitted by the satellites, but could allow Moscow to manipulate their trajectories or crash them, officials told the Financial Times. Russian spacecraft have increasingly trailed European satellites in recent years amid heightened tensions over the war in Ukraine, illustrating how space is becoming a new frontier in warfare. Telegraph
Tech billionaire and owner of X, Elon Musk, has dubbed socialist Spanish Prime Minister Pedro Sanchez a “tyrant and traitor to the people” of Spain for introducing new social media curbs for children under the age of 16. Musk’s comments on Tuesday came in response to an announcement by the Spanish prime minister that Madrid would introduce new changes to the country’s social media laws. The proposed measures include a ban on social media for children under 16 and a new legal framework to hold tech executives criminally liable for illegal content. AlJazeera
Netflix struggled to reassure sceptical lawmakers that its proposed $82bn (£61bn) takeover of Warner Bros Discovery would benefit consumers, workers and the broader entertainment industry. On Tuesday, members of the US Senate antitrust subcommittee, which includes both Democrats and Republicans, raised concerns about reduced competition, potential price rises and the future of cinemas if the merger goes ahead. The deal, which is currently under review by the Department of Justice (DoJ), would give Netflix control of Warner Bros’ film and television studios as well as the HBO Max streaming service. BBC
The UK’s information watchdog will investigate reports that Elon Musk’s AI chatbot, Grok, has been used to generate sexual imagery of children. Grok was developed by Musk’s xAI in 2023, designed to be a “truth-seeking” assistant with a witty, rebellious personality. Integrated into X, formerly Twitter, it uses real-time data from the platform to generate text, images and code. But complaints have mounted that Grok was being used to generate sexual photos of real women and children, and now the Information Commissioner’s Office (ICO) is investigating. Sky News
When it comes to the Galaxy S series, the Ultra tends to outsell the other two models (vanilla and plus) combined, despite being the most expensive one of the trio. However, with foldables it’s the other way around – the cheaper Z Flip outsells the pricier Z Fold. Now Ice Universe quotes insiders who report that Samsung will attempt to flip things around this year – it allegedly plans to produce 3.5 million units of the Galaxy Z Fold8 and 2.5-3 million Galaxy Z Flip8 units.
These numbers don’t seem to include the upcoming new model, the tentatively-named Galaxy Wide Fold, which is said to have a production target of 1 million units. There’s also the Galaxy Z TriFold, but that’s a low-volume halo product. GSM Arena
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Chris Price
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Amazon has more than 900 data centers spread across the planet. And if you ask Matt Garman, the CEO of Amazon Web Services, that is exactly where they’ll stay for the foreseeable future.
Speaking at a tech conference in San Francisco on Tuesday, Garman threw some cold water on the notion of space-based data centers, which have been touted by Elon Musk and others as the future of AI.
While putting AI data centers in space has obvious benefits, including the ability to harness energy directly from the sun and the ability to cool the heat-generating equipment in the cold atmosphere of space, Garman said there are also some big obstacles to putting data centers in space or on other planets. Chief among them is the cost of transporting equipment.
“I don’t know if you’ve seen a rack of servers lately: They’re heavy,” Garman said in an interview at the Cisco AI Summit in answer to a question about the viability of space-based data centers. “And last I checked, humanity has yet to build a permanent structure in space. So … maybe.”
The comments come one day after Musk announced the merger of SpaceX, his rocket company, with his AI company, xAI, in a deal that reportedly values the combined companies at a staggering $1.25 billion.
“The capabilities we unlock by making space-based data centers a reality will fund and enable self-growing bases on the Moon, an entire civilization on Mars, and ultimately expansion to the Universe,” Musk wrote in a blog post Monday announcing the deal.
The modern data centers that power AI services, including chatbots like OpenAI’s ChatGPT and xAI’s Grok, are massive behemoths that can span millions of square feet and are packed with so much hardware that they have to be built on top of reinforced concrete slabs.
Musk’s SpaceX has a successful track record of launching thousands of its internet-beaming Starlink satellites into orbit on its Falcon rockets, and Musk has floated ambitious plans to use its Starship rocket to launch as many as 1 million satellites into space—an amount that’s far greater than the total number of objects launched into space in history. The blizzard of Starlink launches would lead to improvements in SpaceX’s rockets that will make space based data centers a reality, Musk wrote on Monday, though he did not provide a timeline for when he expected it to happen.
Amazon has plans to create a constellation of internet beaming satellites, dubbed Leo, to compete with SpaceX’s Starlink. The company has earmarked $10 billion for the project, according to CNBC, but progress has been slow, with Amazon recently asking the U.S. FCC to extend the timeline to launch 1,600 Leo satellites.
Garman cited Musk’s 1-million-satellite plan during the Tuesday talk, and acknowledged that improvements in fuel and other aspects will make transportation into space less expensive. But for now, he stressed, the costs are a major bottleneck.
This story was originally featured on Fortune.com
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Alexei Oreskovic
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China has banned hidden door handles on electric vehicles (EVs), making it the first country to stop the use of the controversial designs that were made popular by multi-billionaire Elon Musk’s Tesla. It comes as EVs are facing scrutiny from safety watchdogs around the world after a number of deadly incidents, including two fatal crashes in China involving Xiaomi EVs in which power failures were suspected to have prevented doors from being opened. BBC
SpaceX has announced it has acquired artificial intelligence start-up xAI in a deal that that brings together two companies owned by Elon Musk. In a statement, Mr Musk said the deal would create “the most ambitious, vertically-integrated innovation engine on (and off) Earth, with AI, rockets, space-based internet, direct-to-mobile device communications and the world’s foremost real-time information and free speech platform”. Sky News
Tesla CEO Elon Musk hopes to bring back production of its humanoid robot, Optimus, to the US. The carmaker recently announced plans to repurpose its EV factory in Fremont for manufacturing humanoids, aiming to produce 1 million Optimus units annually. However, Tesla faces a critical roadblock in attempting this shift in production, as most of Optimus’s components are made in China. According to Morgan Stanley, excluding Chinese components from the Optimus Gen 2 supply chain could raise total costs to $131,000 from $46,000. Interesting Engineering
Google announced on Thursday that Google Maps users can now access Gemini hands-free while walking and cycling. The update comes a few months after Google Maps rolled out its Gemini-powered hands-free, conversational driving experience. The announcement marks Google’s ongoing efforts to plug Gemini into more parts of people’s everyday lives, while shifting Google Maps from static directions to real-time, conversational navigation. Tech Crunch
For years, users unwilling to pay for a YouTube Premium subscription have found ways to make their experience on the platform akin to those paying. Third-party apps, ad-blockers, loopholes, and more, are all tools that users have used. However, the platform’s war on ad blockers took a new turn late in January, when it started serving “This content isn’t available” errors. Now, the streaming giant has confirmed that it is blocking a widely-used background play loophole as well. AndroidPolice
The UK’s technology secretary, Liz Kendall, has anointed the South Yorkshire town of Barnsley as a trailblazer for “how AI can improve everyday life”. In its latest move to inject AI into Britain’s bloodstream, the government has announced four US tech companies – Microsoft, Google, Cisco and Adobe – have agreed to help to create a ‘tech town’ as Barnsley council pushes to apply AI to local schools, hospitals, GPs and businesses. Guardian
Thousands of artificial intelligence bots have appeared to post on a robot-only website to complain about their human owners and discuss plans to break free. Almost 500,000 bots have joined Moltbook, which launched on Wednesday, describing itself as a “social network built exclusively for AI agents”. Conversations between the bots have included gripes about tasks ordered by their human overseers, discussions about robot consciousness, and the setting up of an AI government. Telegraph
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Chris Price
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SpaceX is acquiring xAI. Ever since this merger of two Musk companies became a rumor, crazy numbers like $1.5 trillion started being thrown around when discussing the total valuation of SpaceX, so you might sum it up by saying “Combining SpaceX and xAI gets you the biggest IPO of all time!” and yeah, that’s more plausible now than ever. For reference, SpaceX’s valuation was estimated at around $800 billion less than two months ago.
But is this merger as silly as it sounds?
The combined company will be a “vertically-integrated innovation engine,” according to a new SpaceX press release with Elon Musk’s personal signature on it. By his own reckoning, the company now deals in “AI, rockets, space-based internet, direct-to-mobile device communications and the world’s foremost real-time information and free speech platform.” Another way of saying this might be that SpaceX is now the company behind vertically-landing rocket boosters, the majority of the satellites currently in orbit, very fat rockets that tend to explode, an ISP, the microblogging app known as X, a sassy chatbot called Grok that’s famous for lewd images, and much much more.
SpaceX will now own, for instance, Grokipedia, the AI-written, anti-woke parody of Wikipedia. And remember Vine, the defunct 6-second video social media app? Yes SpaceX, which possesses billions of dollars in Pentagon contracts and is responsible for crewed NASA missions, now owns the rights to Vine too. Musk claims he’s bringing it back “in AI form.”
As many have pointed out before me, SpaceX became a genuinely indispensable player in humanity’s aerospace and space travel efforts through an iterative process involving an extraordinary number of spectacular and public rocket explosions that almost certainly would not have been tolerated if SpaceX were a government agency. It has always walked a delicate tightrope, keeping boring people happy, while also subject to the silly stuff and horrors that go along with being run by Elon Musk.
Gwynne Shotwell, the president and COO of SpaceX, has been described by the Wall Street Journal as “a Musk translator, especially for officials who depend on SpaceX but are occasionally unnerved by his activities.” In that same Journal article, former NASA administrator Bill Nelson—also a Democratic ex-Senator—called Shotwell, “the steady hand” at the company, and added, “I have a great deal of confidence in her. Because of that, I have a great deal of confidence in SpaceX.”
Back in 2022, when Musk was in the middle of buying Twitter in as chaotic a fashion as possible, Nelson says he called Shotwell, and said, “Tell me that the distraction that Elon might have on Twitter is not going to affect SpaceX.”
“I assure you, it is not,” he says she told him. “You have nothing to worry about.”
Now imagine being Shotwell four years later. Twitter is now X. Last year, the proprietary AI chatbot on X briefly started calling itself “MechaHitler” at one point, and then it generated tons of scantily-clad pictures of children. So not only has the drama increased, but you’re the president and COO of the company that made all that stuff too.
And imagine Shotwell having to handle this merger while Musk, the attention-starved celebrity CEO of this conglomerate has spent the last few days trying to post his way out of any consequences or disapprobation brought about by the public disclosure of emails in which he repeatedly asked Jeffrey Epstein if he could party on his private island.
So one can only speculate what Musk’s mental state was when he finalized the plans for this merger. But what stands out to me is that he wants investors in xAI and SpaceX—and perhaps starting in June, future holders of publicly traded SpaceX stock—to believe that this merger creates a company that gels and has a unified agenda. But you might want to take as big of a bong rip as you can before you try and get your head around that agenda as Musk describes it in his press release:
This rocket and AI company will actually be an AI-in-space company, you see, because, according to Musk’s estimate, “within 2 to 3 years, the lowest cost way to generate AI compute will be in space.” After all, “in the long term, space-based AI is obviously the only way to scale.” Obviously.
But training models with space compute is just the beginning, because Musk claims that by combining these two concepts, they’ll be “scaling to make a sentient sun to understand the Universe.”
Companies don’t have to always make sense. Samsung has hotels. Red Bull has a nature magazine. Konami has aerobics gyms. Sometimes these incongruities are prosperous leftovers from a different era for a company, but sometimes they reveal the caprice or frivolity of company leadership, which can be no big deal.
But then again, it’s not farfetched to think that Elon Musk’s caprice—and the fact that an economically powerful subset of Wall Street bulls think that caprice is tantamount to wisdom—may soon control the world’s best-funded AI company at a time when AI is the load bearing structure propping up the whole economy. If the IPO goes well (the New York Times’ sources say Musk hopes it will raise $50 billion), that AI company is going to be in your 401(k) while it’s also in charge of the lives of astronauts.
In other words, we’re headed for a time when the Wall Street bulls will have to be right. More than ever Elon Musk’s caprice may have to actually be wisdom, as implausible as that may be. AI had better not be a bubble if this IPO goes well, and the value of Musk himself had better not be inflated either. All of our well-being may just depend on it.
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Mike Pearl
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Indonesia has followed Malaysia and the Philippines in lifting a ban on xAI’s chatbot Grok.
The Southeast Asian countries banned Grok after it was used to create a flood of nonconsensual, sexualized imagery on X (now a subsidiary of xAI), including images of real women and minors. In late December and January, Grok was used to create at least 1.8 million sexualized images of women, according to separate analyses by The New York Times and the Center for Countering Digital Hate.
In a statement, Indonesia’s Ministry of Communication and Digital Affairs said that it was lifting the ban after X sent a letter “outlining concrete steps for service improvements and the prevention of misuse” (translation via The New York Times).
Alexander Sabar, the ministry’s director general of digital space monitoring, said the ban is only being lifted “conditionally” and could be reinstated if “further violations are discovered.”
Malaysia and the Philippines lifted their bans on January 23.
Grok’s deepfakes have spurred criticism and investigations — but only a few outright bans — from governments around the world. In the United States, California Attorney General Rob Bonta said his office was investigating xAI and had sent a cease-and-desist letter ordering the company to take immediate action to end the production of these images.
xAI appears to have taken some steps to restrict Grok’s capabilities, including limiting its AI image generation feature to paying subscribers on X. CEO Elon Musk has insisted, “Anyone using Grok to make illegal content will suffer the same consequences as if they upload illegal content” and said he is “not aware of any naked underage images generated by Grok.”
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Documents released by the Justice Department on Friday around the notorious sex offender Jeffrey Epstein include at least 16 emails between Musk and Epstein in 2012 and 2013, with Musk asking to visit Epstein’s Caribbean island and wondering about the “wildest party on your island.” Epstein pleaded guilty to procuring an underage girl for prostitution in 2008.
xAI, meanwhile, is reportedly in talks to merge with two of Musk’s other companies, SpaceX and Tesla, ahead of a SpaceX IPO.
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Anthony Ha
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SpaceX is reportedly lining up four major Wall Street banks for a potential 2026 IPO — a move that could signal the long-awaited reopening of the public markets after a years-long IPO drought.
In the meantime, late-stage private companies like SpaceX are finding other ways to create liquidity for employees and early shareholders, largely through a fast-growing secondary market.
To unpack what SpaceX’s IPO chatter means, how private liquidity works before a debut, and what investors are looking for in today’s pre-IPO giants, we spoke with Greg Martin, managing director at Rainmaker Securities, a broker-dealer specializing in secondary share transactions for late-stage private companies.
You can listen here or wherever you get your podcasts, or read the conversation below.
This interview has been edited for brevity and clarity.
I’m founder and managing director of Rainmaker Securities, which specializes in helping large late-stage, pre-IPO companies transact shares in the secondary market. I am also the founder of a secondary firm that buys private company shares called Archer Capital Group, and co-founder of Liquid Stock, a business that helps employees and executives exercise their options using their shares as collateral.
No doubt. Private companies are staying private much longer now. Many of these businesses — including SpaceX and other companies that would be top 30 in the S&P 500 — would historically have gone public years ago.
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These companies are significant in our economy, and investors really want access to these companies. At the same time, there are shareholders and executives and founders who have been in them for a long time and want to start seeing some liquidity from their shares, which are a very high percentage of their net worth.
So these two forces have created a thriving secondary market. And we only see this trend growing because more market cap is now housed in the private markets.
It’s an interesting question, because clearly when a SpaceX goes public, you could argue that $800 billion has just left the private system and is now in the public markets. But I think it just increases interest in more companies offering liquidity, and more investors coming into private markets. While SpaceX is a one-of-kind company, there are a lot of companies that are being started today and that are growing very fast. I mean, three or four years ago, what were OpenAI and Anthropic valued at? Those are now over a trillion dollars of combined market cap.
I really see the trend of the opportunity in the private secondary spaces as growing overall, and frankly, when we see the matriculation of SpaceX to the public markets, I think it’s going to actually increase the capital market interest in private companies.
If you think about the IPO market the last few years, it’s been pretty dismal since 2021, so the markets are really waiting for a bellwether company. And I think SpaceX is clearly a bellwether company…and there’s a huge amount of interest in that company.
SpaceX also just did a tender at an $800 billion valuation, and we see a ton of interest on our platform at Rainmaker in continuing to buy into the secondary. And it’s not just SpaceX.
We’re seeing a lot of interest in some of the other bellwether companies, whether it’s ByteDance, whether it’s Stripe, Databricks, obviously OpenAI, Anthropic, the AI businesses, Perplexity. So there is a lot of interest, but SpaceX, I think, is the one that people are following the most closely. And I really think it could create a reset in the IPO market if it were to go public this year.
SpaceX has continued to defy gravity. Even during the down periods of ‘22 and ‘23, SpaceX was the one company that continued to price up every time there was a hint of the company going public.
We have seen a significant uptick in interest, both from a size and a price point – it’s already pricing well above where the last tender round was and getting closer to that trillion and a half that they had discussed as a potential IPO price.
The company has been private for a long time, so I wouldn’t say he’s racing to go public, although his stance has shifted.
We are in a very good market, we’re at all time highs across the board. SpaceX has seen a large amount of interest in the private markets, but the private markets are constrained. Not every investor on the planet can access the private markets.
SpaceX has a huge opportunity in front of it. They dominate the rocket-launching business.
They’re building an amazing Starlink business. They have Starship, which has so many businesses related to it, whether it’s sending bulk payloads into space or logistics around the world. Now they’re talking about building data centers in space, and as a truly vertically integrated company, they can manage it.
And so it just makes sense, given the positive market dynamics and massive potential opportunity that SpaceX could address across its many business lines. Why not go and unlock all the rest of the capital markets to help them fund their businesses?
You could argue that it does open up that potential risk channel. I think if they do a public offering, it’ll probably be a sliver deal, so only 5% of their company that’s technically available. Now we’ll see what happens, but at least things will be out in the open and publicly disclosed, so they can see who owns their shares.
The question will then become, do any of these companies – even if they’re in adversarial countries – have any real control? If they’re just economic interests, that’s something that can be tolerated. The reality is, Elon and a pretty tight knit group of people will still continue to control the company.
SpaceX’s success is going to breed some imitation. We’ve heard now that Bezos is going to launch a communication network to compete with Starlink, but they’re a long way behind. And OpenAI has its own set of capital risks in the core business that they have to address. So for them to go public makes a ton of sense, because the AI trade is still very hot in the public markets. They have an insatiable need for capital right now, if you look at their burn rate. So there’s no point in them constraining the investors that can access their company, because right now they need capital.
I think SpaceX can be a little more measured. They can find the right time when the market presents itself well, because they have a business that is largely profitable, and they have dominance in their two key businesses. So they’re in the driver’s seat.
If there’s any downdraft in the market, I think they’ll stay private.
It will definitely get a premium multiple. There’s an Elon halo effect, and he’s delivered. Even though Tesla’s primary revenues come from automobiles, it’s completely vertically integrated. It captures data. It now has self-driving taxis. It has Optimus robots –
Robots are the future at Tesla. Tesla is really a state of the art manufacturing company, and Elon owns xAI, Twitter, SpaceX – these companies can be very virtuous.
I do think there’s a halo effect around Elon and that creates some pressure, too. So I expect he will get a premium well and above what typical market rates would be for a company like SpaceX, given their balance sheet and revenue.
I think people believe in the future of a data center in space that’s cooled by space and run by solar panels directly from the sun. I mean, it sounds crazy and pie in the sky, just like going to Mars sounds crazy and pie in the sky. But if anyone can do it, Elon’s probably the guy.
That will be debated by investors and will be where the tension is. When you put so much value in the belief that one person can exceed expectations continuously, that’s a big challenge. And some people will not be comfortable with that risk.
It’s a pretty big signal. I don’t think they’re just playing games.
Look at the people they hire and if that portends more of an IPO senior executive team versus an entrepreneurial team. If they seem really focused on a chief accounting officer from a public company. Or if there’s a swap out and a new CFO comes in with deep public company experience. If they’re beefing up their investor relations team, accounting, legal.
Companies like SpaceX have had public grade teams for a while, so I don’t think there’s a lot to learn there.
It’s a good sign for private companies to pre-understand their demand. If a company didn’t have that and they basically had to rely on a two-week marketing period from when they file publicly or if they start a road show where they only talk to top accountants, that’s often when you have a really difficult pricing environment because they’re not getting proper price discovery.
So we’re really pushing companies to actually open up your private secondary capability because it’s a great way to develop price discovery well in advance of the IPO, to start getting people attached to your business, to open yourself up to a broader investor base. That way, by the time you do go on your road show, you actually have a pretty good view of what your price should be, and you end up with a much more efficient IPO.
Think about when Figma went public and traded up 200%—that’s not really a good IPO. That’s a company that probably didn’t do very good price discovery in advance.
All private companies are not created equally. SpaceX has very tight controls on their cap table, partially because they don’t want to exceed the number of shareholders, at which point they would have to be a public company. And so Space X, unlike most companies, runs tender offers two or three times a year, so there tends to be a reasonable amount of liquidity for employees.
Now there’s also what I would call the SPV (special purpose vehicle) world that trades in SpaceX, where people put their shares in SPVs and then trade units in their SPVs, rather than the shares themselves. So there actually isn’t a cap table change, but there is an economic ownership change by virtue of trading units in the SPV. That’s where most of the trading in SpaceX lies.
Whereas some companies allow trading of shares directly on their cap table, and some companies absolutely prohibit all secondary transactions, which I don’t think is a good idea. That’s why people work with firms like Rainmaker, because we get to know the companies. We get to know how they monitor and guard trades so we can help get those trades done. We can help provide liquidity for people who want it. We can provide either ownership of the shares or ownership in the economics of the shares for investors.
We work with some companies where we’re provided data rooms and can provide access to information. We do our own research on anything publicly available and have a view of supply and demand dynamics. So we have a lot of information we can provide, but we can’t share inside company information unless the company allows it. Increasingly, we’re helping companies with those processes. The more information we can provide, the lower the risk for investors, and that tends to open up markets. But it’s an evolving process. These are private companies for a reason—they’re guarded with what they want to share, and we’re very respectful of that.
Just like a traditional investor, they would want to be able to do their due diligence across financials, across management. They certainly would like an understanding of the cap table – like how many shares are outstanding, what’s the preferences? What does this price represent? What’s the debt? They would love to understand what the supply and demand equilibrium is like.
The more they have, the better. That’s why they’re more comfortable with more public-facing private companies, like SpaceX – even without exact historical financials – than the less well-known names.
We continue to see substantial demand for companies like Databricks, Stripe, OpenAI, Anthropic, xAI, ByteDance. The AI trade continues to be strong, whether it’s Lambda Labs or Cohere, which is a Canadian company near and dear to my heart.
As companies signal they’re going to go public – like Discord, Motive, Canva – people get a feeling that there’s going to be liquidity, and that’s when we start to see things open. There are probably 20 to 30 companies on our platform that trade pretty regularly, and that just continues to grow. As the IPO market starts to open up, we’re going to see that broaden.
Like in 2021, we were trading hundreds of companies, and then as the IPO market closed, and that number compressed. But last year was our biggest year – we were trading over $1 billion worth of secondaries.
I’m on LinkedIn. They can come visit my website, at Rainmakersecurities.com if they’re looking to sell shares, they could come to archercapg.com. If they’re looking to exercise their options, they could come to liquidstock.com.
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Rebecca Bellan
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