This idea came from musk wanting to fold his X and xAI investments in with his (likely successful) spaceX IPO.

Yup, likewise Starlink - while space internet is an interesting and viable concept (whether it'll earn itself back is another question, I'm not convinced), the real motivation behind it was to create demand for many SpaceX launches. There have been 352 Starlink launches [0] so far, out of 596 total [1]. If it wasn't for Starlink, SpaceX would only have been operating at 1/3 to 1/2 of what it does today, cutting into their "economics of scale". And they'll need demand to make Starship viable, the possible moon missions aren't enough to fund or justify the whole project. Hence also the ideas of colonising Mars, which - if someone is willing to pay for it - would create a large and steady demand for launches / flights.

[0] https://en.wikipedia.org/wiki/List_of_Starlink_and_Starshiel...

[1] https://en.wikipedia.org/wiki/List_of_Falcon_9_and_Falcon_He...

Yeah, if he gets more SpaceX shares in exchange for the xAI garbage shares then he wins, because the SpaceX shares will sell well.