Behind SpaceX’s Surprise Deal to Buy xAI

Summary of Behind SpaceX’s Surprise Deal to Buy xAI

by The Wall Street Journal

12m•February 3, 2026
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Overview of Behind SpaceX’s Surprise Deal to Buy xAI

This episode of The Wall Street Journal’s “What’s News” (AM edition) covers top headlines: SpaceX’s surprise acquisition of xAI and Elon Musk’s vision to integrate rockets and AI; a narrowly poised House effort to end a partial government shutdown; a federal judge blocking the termination of Temporary Protected Status (TPS) for Haitians; new developments in the Jeffrey Epstein document releases (including deposition offers from Bill and Hillary Clinton and fallout in the U.K.); and a discussion with WSJ UK bureau chief David Luno about declining global views of the United States and the possible economic and strategic consequences.

Key headlines (quick bullets)

  • SpaceX confirmed it is acquiring xAI, creating what Musk called “the most ambitious, vertically integrated innovation engine on and off Earth.”
  • The House, led by Speaker Mike Johnson, aimed to vote to end a partial government shutdown with a very thin margin.
  • A federal judge blocked the administration’s attempt to revoke TPS for ~350,000 Haitian immigrants.
  • Bill and Hillary Clinton offered to give depositions in the House’s Jeffrey Epstein inquiry after facing contempt threats.
  • Newly released Epstein-related documents triggered potential police scrutiny in the U.K.; questions raised about Lord Peter Mandelson and Prince Andrew.
  • WSJ interview: global favorability toward the U.S. has dropped sharply, with implications for trade, defense sales, and American brands.

Deep dive: SpaceX acquires xAI

  • What happened: SpaceX announced a merger with xAI, combining Musk’s rocket company with his AI startup. The memo described the combined entity as a massive, vertically integrated innovation engine.
  • Financial context:
    • SpaceX is a profitable business that has signaled plans to go public (reported potential IPO around mid-year).
    • xAI reportedly generates little revenue and incurs very high computing costs (burns billions).
    • SpaceX previously invested ~$2 billion into xAI; Tesla committed a similar amount.
  • Strategic rationale:
    • Musk frames the deal as enabling long-term ambitions like building AI data centers in space (leveraging solar power and looser regulations).
    • The merger pairs a cash-generating business with a capital-intensive, loss-making AI operation — raising investor questions about valuation and the path to a combined IPO.
  • Implication: The move is unexpected (many expected xAI to be tied to Tesla) and could complicate investor reception to any SpaceX IPO or alter capital allocation across Musk’s companies.

U.S. politics: shutdown talks and law enforcement changes

  • House dynamics: Speaker Mike Johnson said he had the votes to end a partial government shutdown, but only by a narrow margin; success depends on near-unanimous GOP support.
  • Democratic stance: House Democrats oppose an early procedural spending vote and have conditions for support of any long-term spending bill (including ICE funding conditions).
  • Law enforcement policy: DHS announced officers in Minneapolis would receive body cameras immediately, with national expansion “as funding becomes available.” (Transcript attributed the announcement to a DHS official.)

Immigration: Haitian TPS ruling

  • A federal judge blocked the administration’s attempt to revoke Temporary Protected Status for about 350,000 Haitian immigrants.
  • Rationale: The judge found the government offered no evidence that Haitians under TPS posed a threat and said the decision to end TPS was, at least in part, motivated by racial animus.
  • Broader context: The administration has sought to end TPS designations for several countries (e.g., Honduras, Somalia, Venezuela), many of which remain tied up in court.

Jeffrey Epstein fallout — U.S. and U.K. developments

  • House subpoenas and depositions:
    • Bill and Hillary Clinton offered to appear for depositions after facing a possible contempt vote; they assert no personal knowledge of Epstein’s crimes (Bill has acknowledged flying on Epstein’s jet).
  • U.K. ramifications:
    • Newly released documents reportedly show Lord Peter Mandelson forwarding internal Downing Street information to Epstein, prompting police review of the emails.
    • British PM Keir Starmer urged evidence from Mandelson and Prince Andrew, and suggested Mandelson should resign from the House of Lords; Mandelson denies recollection of receiving money from Epstein.
  • Implication: The revelations have shifted some of the scandal’s focus in the U.K. toward possible criminal or official-conduct investigations.

Interview highlight: Global views of the U.S. (David Luno)

  • Key findings from polling/interviews:
    • Britain: unfavorable views of the U.S. roughly doubled, reaching ~64%.
    • Germany: 71% view the U.S. as an adversary.
    • Across Europe: only ~16% now view the U.S. as an ally (very low historically).
    • Canada and Mexico: nearly two-thirds hold unfavorable views; many now consider the U.S. a bigger threat than China.
    • Declines also visible in long-time Asian allies (e.g., Korea, Japan).
  • Business and strategic implications:
    • Short-term resilience of American brands and culture is strong, but long-term diversification by allies (trade agreements, defense procurement, local tech) could erode U.S. economic and soft-power advantages.
    • Allies may hedge by cultivating relationships and supply chains with other partners (Europe, China, India) and by rearming or sourcing more locally.
  • Takeaway: The “America First” approach risks translating into economic and strategic costs over time as partners seek alternatives.

Notable quotes

  • Elon Musk (memo): the merger will “form the most ambitious, vertically integrated innovation engine on and off Earth.”
  • Federal judge on TPS: the decision to end protections was “motivated, at least in part, by racial animus.” (paraphrase from transcript)
  • House Democratic leader Hakeem Jeffries: Democrats drew a “line in the sand, red line” on conditions for funding and appropriations.

Takeaways and implications

  • The SpaceX–xAI deal is a bold consolidation of Musk’s aerospace and AI efforts; it raises strategic possibilities (space-based AI infrastructure) but also investor risk because it melds a profitable aerospace firm with a capital-hungry AI unit.
  • Domestic politics remain fragile: a narrow House margin for a shutdown-ending vote underscores ongoing legislative instability.
  • Legal rulings and document releases (TPS, Epstein) continue to have immediate human, legal, and reputational consequences domestically and abroad.
  • Falling global favorability toward the U.S. could lead allies and trading partners to diversify away from American suppliers, tech, and defense over time — a potential long-term economic impact for U.S. firms.

Suggested follow-ups (WSJ reporting to watch)

  • WSJ reporting on investor reaction and regulatory filings related to the SpaceX–xAI merger and any IPO timeline updates.
  • Coverage of the House shutdown vote outcome and the final terms of any spending measure.
  • Court filings and further judicial rulings on TPS for Haiti and other countries.
  • Additional releases and investigations related to the Epstein documents, especially developments in the U.K. and any new subpoenas or depositions.