Elon Musk’s rocket company SpaceX Corp. has acquired his artificial intelligence startup xAI Corp. ahead of what will likely be one of the largest initial public offerings in history later this year.

Musk estimates that within two to three years, the most cost-effective way to generate AI compute will be in space, as Big Tech companies spend hundreds of billions in the pursuit of artificial genera...

The transaction values SpaceX at $1 trillion, and xAI at $250 billion, according to a person familiar with the matter.