Per a Reuters report, Elon Musk’s SpaceX is in talks to merge with his AI company xAI before the latter’s IPO launch. The plan, which Reuters is reporting exclusively, would give ‌fresh momentum to SpaceX’s effort to launch data centers into orbit as Musk battles for supremacy in the rapidly escalating AI race against tech giants like Google, Meta and OpenAI.

The combination would bring Musk’s rockets, Starlink satellites, the X social media platform, and ​Grok AI chatbot under one IPO. Such a stock launch would likely boom in value straight away due to the strength/popularity of the entities. Furthermore, the merger and eventual IPO launch could also fuel Musk’s Tesla (TSLA) stock. Musk companies often share the same bullish or bearish investor sentiment.

Under the proposed merger, shares of xAI would be exchanged for shares in SpaceX. Two entities have been set up in Nevada to facilitate the transaction, a source close to the deal told Reuters. Reuters could not determine the value of the deal, its ‌primary rationale, or its potential timing.

Tesla (TSLA) stock fell 3% on Thursday, despite Wednesday’s earnings report beating forecasts. TSLA climbed 3% after the markets closed yesterday. For the quarter, Tesla reported revenue of $24.90 billion vs. $25.11 billion estimated, a 2.4% drop from a year ago. Tesla posted adjusted earnings per share (EPS) of $0.50 vs $0.45 expected, with operating income of $1.41 billion vs. $1.32 billion estimated. Tesla’s Q4 gross margin came in better than expected at 20.1% vs. 17.1% estimated.