Elon Musk’s artificial intelligence startup, xAI, has successfully acquired his social media platform X, previously known as Twitter, in a significant all-stock transaction, as announced by Musk in a post on X this past Friday. In his announcement, Musk stated, “xAI has acquired X in an all-stock transaction.”
He elaborated on the financial implications of the deal, revealing that the merger values xAI at an impressive $80 billion, while X is valued at $33 billion, which reflects a reduction from its earlier enterprise value of $45 billion due to the company’s $12 billion debt.
Musk characterized the futures of both companies as “intertwined,” emphasizing the strategic importance of this acquisition. He remarked, “Today, we officially take the step to combine the data, models, compute, distribution, and talent,” highlighting the synergies that will emerge from this merger.
This acquisition firmly places X—an influential social media platform that Musk purchased in 2022 under its former name, Twitter—under the umbrella of xAI, a company Musk founded in 2023 with the intention of competing against established players like OpenAI. Prior to this acquisition, xAI’s products, including its AI chatbot Grok, were already integrated into the X platform, but this deal further solidifies the connection between two of Musk’s most prominent ventures.
Musk, who also heads Tesla, SpaceX, and Neuralink, noted in his post that the valuation of X has been adjusted to $33 billion, a decrease from its previous enterprise value of $45 billion due to the existing debt. Musk originally acquired X for $44 billion in October 2022, taking the company private. However, the valuation of X has fluctuated significantly over time, with Fidelity once estimating its worth at less than $10 billion.
Since the inauguration of President Donald Trump—whom Musk actively supported and now advises as a special adviser leading DOGE—the valuation of X has seen an upward trend, largely driven by investor perceptions of the platform’s growing influence. Musk mentioned in his post that X boasts over 600 million active users, underscoring its substantial reach.
Musk launched xAI in 2023 and has since bolstered the startup by recruiting top-tier AI researchers from industry giants such as Google DeepMind, Microsoft, and OpenAI. Additionally, he has established extensive AI data centers to position xAI competitively among leading AI developers. To support these initiatives, Musk has embarked on an unprecedented fundraising campaign, including a $6 billion funding round in December that valued xAI at $45 billion. According to Musk, the current valuation of xAI has surged to $80 billion.
xAI has made notable strides in its quest to compete with OpenAI, Google DeepMind, and Anthropic. In February, the startup launched Grok 3, a cutting-edge AI model that stands up to the industry’s leading models in benchmarks related to mathematics, science, and coding.
Despite these successes, Musk has not shied away from interfering with OpenAI, a company he co-founded alongside Sam Altman. He is actively attempting to impede OpenAI’s transition to a for-profit model, which is crucial for securing future funding. Musk has made this transition a focal point of his lawsuit against OpenAI and even submitted a $97 billion takeover bid for Altman’s startup in February, which was promptly rejected by OpenAI’s board. However, this move may have inadvertently inflated the market value of OpenAI’s assets.
One of the significant advantages that xAI possesses over OpenAI and other competitors is its access to the vast repository of posts accumulated by X over the years. This wealth of data provides xAI with a critical edge in the race for AI training data. Furthermore, X serves as a substantial consumer application, allowing Musk’s AI startup to effectively engage with users.
Musk has a history of intertwining the operations of his various companies, a practice that has previously led to legal complications. With the acquisition of X by xAI, the two entities are now effectively merged, suggesting that the true value of X may lie in its potential to further Musk’s broader ambitions in the field of artificial intelligence.
