Elon Musk’s merger musings and an IPO race between OpenAI and Anthropic

The most destabilising force in today’s AI market is not a new model release or benchmark result. It is Elon Musk openly contemplating whether to fuse parts of his empire before taking SpaceX public.

That single idea hangs over the parallel IPO plans of OpenAI, Anthropic and Musk’s own xAI, because it would instantly redraw the competitive map.

Musk’s merger option is the wild card

Musk has floated the possibility of merging SpaceX with either xAI or Tesla ahead of a SpaceX IPO. The logic is familiar Musk thinking: combine capital-intensive infrastructure, data, talent and compute into a single vertically integrated platform.

Backers such as Joe Lonsdale, an investor in xAI and aviation startup Jovi, argue there are genuine synergies, particularly between X, xAI and SpaceX’s data and compute needs. In the most extreme version, such a deal could create the largest technology company in the world by private valuation.

The risk is execution. Folding together radically different cultures and capital structures could just as easily destroy focus. Even supporters concede it is unclear whether this would be a great business, or simply an audacious one.

xAI’s rise tightens the race

What makes Musk’s manoeuvring credible is xAI’s pace. The company has grown quickly, absorbed massive amounts of compute and delivered results that investors describe as bullish. In recent months, xAI and Anthropic have both outperformed expectations relative to OpenAI in terms of momentum and narrative.

That matters because IPO markets are comparative. If xAI enters public markets wrapped into a broader Musk platform, it would instantly reset how investors benchmark standalone AI labs.

OpenAI’s scale comes with pressure

OpenAI is reportedly targeting a fourth-quarter IPO at a valuation around $830 billion. The ambition is unmatched, but so are the demands. The company is not yet profitable and remains locked in an arms race that requires relentless spending on research, talent and training infrastructure.

Deals such as the reported $50 billion investment from Amazon provide capital, but critics see elements of circular trade: capital in exchange for cloud usage that itself consumes capital. To justify its valuation, OpenAI must keep widening its technical and commercial lead while burning cash at historic levels.

That leaves little margin for error if competitors close the gap.

Anthropic in stealth mode and on a faster path to breakeven

Anthropic is also planning an end-of-year IPO, but with a different pitch. Projections suggest it could break even by 2028, roughly two years ahead of OpenAI. Its emphasis on safety, enterprise adoption and capital discipline has resonated with certain investors, particularly governments and regulated industries.

In a market increasingly wary of unchecked spending, profitability timelines matter almost as much as model capability.

Do public markets still matter?

Executives across the sector have been surprised by how deep private markets have become. Yet even with sovereign wealth funds and megacap partners, the scale of capital required for frontier AI all but forces companies toward public markets.

This is where Musk’s shadow looms largest. If SpaceX, xAI and Tesla were combined in some fashion, they would offer public investors a diversified, infrastructure-heavy alternative to pure-play AI labs.

That would make life harder for OpenAI and Anthropic at precisely the moment they need optimism, not comparison.

Beyond AI: healthcare, transport and regulation

The discussion also touches on where AI could deliver the biggest societal returns. Healthcare stands out as both the greatest opportunity and the hardest problem. Costs are spiralling, debt is mounting and productivity is stagnant. AI could help, but outdated laws and regulations slow deployment.

The idea of regulatory sandboxes, where AI tools can be tested safely at scale, is gaining traction as a way to unlock progress without sacrificing oversight.

There is similar optimism around flying cars and advanced mobility, with companies such as Jovi and Archer pushing forward, aided by a US administration that is broadly supportive of AI and frontier technology.

Let's all stand back

OpenAI and Anthropic are racing toward IPOs in a capital-hungry market. xAI is accelerating under a founder willing to bend corporate form to his will.

If Musk follows through on a merger ahead of a SpaceX listing, it would not just create a mega-company. It would force investors to rethink what an AI company actually is.

In that scenario, the IPO race stops being about models and margins, and becomes a referendum on which vision of the future feels most durable.