Today's Edition
Eissa Ali AlMannaei*
In recent years, artificial intelligence has emerged as the primary destination for investment in innovation and technological progress, whether in financial markets, enterprise software, logistics or even consumer electronics, and healthcare.
Companies and investors alike have raced to integrate AI into products, business models, and both institutional and personal management. In this shift, AI has moved from a technological interest to a core tool in public and private markets.
Investors have followed the sector’s rapid growth, driven by rising demand for AI models, infrastructure and related technologies such as semiconductors, automation, and cloud computing. As AI reshapes most industries, and despite repeated warnings from experts and technology leaders about the risk of an AI bubble, investors continue to bet heavily on AI, often redirecting capital away from other sectors.
Billionaire Elon Musk has alternated between promoting and warning against AI. He has predicted that AI could surpass human intelligence within the coming years, make all people wealthy and render jobs optional, with work becoming a matter of meaning or enjoyment rather than necessity.
These visions align with the ambitions of the world’s richest man, whose wealth exceeds $665 billion, and extend to projects that seem imaginary, such as implanting brain chips to enhance human capabilities to keep pace with superior AI systems, reaching Mars and the Moon and launching AI data centres into space.
Musk initially invested in AI through the nonprofit OpenAI, then shifted toward for-profit ventures across his multiple companies. As investment markets evolve and some technologies lose ground to AI, his ambitions led him to merge SpaceX and xAI into a single entity valued at $1.25 trillion. The goal is to align objectives and extend AI into space through data centres that could reduce costs compared to Earth-based facilities. This vision carries risk if any disruption occurs, given the concentration of investment in AI, yet it follows in the footsteps of the investment ambition to reduce the costs of operating AI technologies.
This is not the only example of consolidation or focused investment in AI. About a year ago, Musk merged his social media company X with xAI. Tesla is also investing around two billion dollars in AI. As ambitions grow, AI demands massive capital commitments. Corporate mergers can provide financial strength, but concentrating investment and reducing diversification can expose investors to risks of instability and high sensitivity to market changes.
The merger of SpaceX and xAI carries both risk and ambition. It is a bet on emerging technologies whose widespread adoption is not guaranteed. Still, it is not an empty gamble. If successful in reducing the cost of AI data centres and relocating them to space, it could mark a major transformation in the space economy and ease pressure on Earth’s energy and water resources.
Space offers high solar energy efficiency due to the absence of an atmosphere and an uninterrupted solar supply. Such a shift would also generate demand for SpaceX launches, satellite deployment, and even space transport, while enabling computing growth without heavy regulatory and environmental constraints.
The concentration of investment in the AI sector, despite the diversity of its applications, may well usher in a new era of innovation and technological advancement. The risk extends beyond capital allocation to the future of AI technologies themselves and their ability to generate returns commensurate with massive investment. Yet without risk, many of today’s breakthroughs would never have materialised, and it is ultimately the outcomes of real-world experimentation that provide the decisive measure of success.
*Researcher at TRENDS Research and Advisory
