SpaceX-xAI Merger: The $1.25T Company

The core logic of the merger focuses on Orbital Data Centers. Musk argues that AI is...

What I Read This Week: a summary of the content that I consumed this week…

Caught My Eye…

1) Project Vault: The $12B Strategic Mineral Reserve

President Trump signed the executive order for Project Vault on February 2, 2026, establishing a $12 billion strategic reserve to secure the U.S. tech, defense, and industry sectors. The financial engine behind it is a hybrid model: $10 billion in long-term loans from the US Export-Import (EXIM) Bank paired with ~$1.7 billion in private capital from a consortium of industrial giants.

The move is a direct response to China’s 90% dominance in mineral processing and strict export licenses on rare earths late last year. Unlike the existing National Defense Stockpile, which is strictly for military use, Project Vault acts as a commercial shock absorber. It allows private manufacturers to buy materials at a stable price floor during market volatility, essentially creating a “Strategic Petroleum Reserve” but for the ingredients of the digital age.

Critically, Project Vault expands into a multi-national strategy. Rather than going it alone, the US signed bilateral critical minerals frameworks with 11 countries in one day. Secretary Rubio also announced the creation of FORGE (Forum on Resource Geostrategic Engagement) and the continued partnership with Pax Silica, the Department of State’s flagship effort on AI and supply chain security, with 9 signatory countries.

“We stand ready and intend to work with each country here today to find a specialized role that you can play.” - Secretary Rubio

2) SpaceX-xAI Merger: The $1.25T Company

On February 2, 2026, Elon announced that SpaceX acquired xAI and merged it into a single vertically integrated innovation engine. This is the largest merger in history, valuing the combined entity at ~$1.25 trillion and effectively bringing the Grok AI model and the social media platform X under the same roof as the world’s leading aerospace company.

The core logic of the merger focuses on Orbital Data Centers. Musk argues that AI is hitting a wall where the electricity and cooling requirements to continue scaling models are becoming unsustainable for terrestrial grids.

“Those who have lived in software land don’t realize they’re about to have a hard lesson in hardware.” - Elon Musk

Musk believes that in the long term, space-based AI is the only way to scale, leveraging near-constant solar power (which removes the need for battery storage) and the natural cold of space for cooling. He estimates that, in the next 3 years, the lowest-cost way to generate AI compute will be in space. The current goal is to add 100 gigawatts of AI compute capacity annually by launching a million tons of satellites generating 100 kW of compute power per ton. This would mean getting SpaceX to launch a Starship almost every hour, carrying 200 tons per flight.

Financially, the deal also acts as strategic support for xAI, which is burning through cash at an increasing rate for its major infrastructure buildouts. By merging with SpaceX’s highly profitable operations ($8B in profit last year, driven mainly by Starlink), xAI secures additional runway for its push toward more advanced models.

3) Waymo’s $16B Raise: Tokyo, London, and Beyond

This week, Waymo announced a historic $16 billion investment round, propelling the company to a $126 billion post-money valuation. While Alphabet remains the majority investor, the round drew significant support from more than a dozen global financiers, including Dragoneer Investment Group, Sequoia Capital, Andreessen Horowitz, Tiger Global, and Kleiner Perkins. This influx of capital marks a transition from proving autonomous technology to executing a massive global commercial rollout. This trust was built on a foundation of safety that statistically showed a 90% reduction in serious injury crashes over 127 million miles of operation.

The company’s growth metrics in 2025 were unprecedented, with Waymo tripling its annual volume to 15 million rides and surpassing 20 million lifetime rides. Today, they provide over 400,000 paid rides per week across six major U.S. cities, and in 2026, they plan to expand into 20 additional cities, including Tokyo and London.

“Waymo is an exceptional business, leveraging its compounding data advantage to usher in a new era of transportation and a safety culture that can save millions of lives.” - Konstantine Buhler, Partner at Sequoia

By eliminating human error factors such as distraction and fatigue, autonomous driving is moving beyond a speculative research project and toward a scalable public utility that is actively reimagining urban mobility and safety.

We are working on Deep Dives on critical minerals, SpaceX, autonomous driving, and more for Q1. Subscribe to not miss them here:

Learn With My Friends and Me…

• Deep Dive: Why Is Solar Attracting $500B Every Year

• All-In: Epstein Files, Is SaaS Dead?, Moltbook Panic, SpaceX xAI Merger, Trump’s Fed Pick

Other Reading…

• Elon Musk (Cheeky Pint / Dwarkesh Podcast)

• Ongoing Role of L2s (Vitalik Buterin)

• Software Development Renaissance (Greg Brockman)

• The Long Game for Crypto (Chris Dixon)

On X…