Elon Musk’s AI startup, xAI, has completed the acquisition of his social media platform X, previously known as Twitter, through an all-stock transaction. This announcement was made by Musk in a post on X. He stated, “xAI has acquired X in an all-stock transaction,” noting that the deal values xAI at $80 billion and X at $33 billion, factoring in $12 billion of debt reduction from its original $45 billion valuation.
Musk described the future of both companies as “intertwined,” highlighting the integration of data, models, compute, distribution, and talent between the two. This acquisition brings the influential platform X, which Musk purchased in 2022 under its former name Twitter, under the umbrella of xAI, established by Musk in 2023 to rival OpenAI. Prior to this deal, xAI’s products, including its AI chatbot Grok, were already integrated into the X platform, and this acquisition further solidifies the link between the two entities.
Reports from The Wall Street Journal and other publications indicate that shares of X and xAI will be swapped for shares of a new holding company, xAI Holdings Corp. Executives from both companies believe this merger will facilitate easier fundraising opportunities for the combined entity.
Musk, who also oversees Tesla, SpaceX, and Neuralink, mentioned in his announcement that this transaction values X at $33 billion, a decrease from an enterprise value of $45 billion due to its $12 billion debt. Musk initially acquired X for $44 billion in October 2022, bringing it into private ownership. However, its valuation has fluctuated over the years, with Fidelity at one point valuing X at under $10 billion.
Since the inauguration of President Donald Trump, for whom Musk campaigned actively and now serves as a special adviser leading DOGE, X’s valuation has increased significantly as investors perceive the platform as more influential. Musk noted that X now boasts over 600 million active users.
xAI, launched by Musk in 2023, has been bolstered with leading AI researchers from Google DeepMind, Microsoft, and OpenAI, and has developed extensive AI data centers to compete with other prominent AI developers. This has been supported by a significant fundraising campaign, including a $6 billion round in December that valued xAI at $45 billion. According to Musk, xAI’s current valuation stands at $80 billion.
The startup xAI has made substantial progress in catching up with OpenAI, Google DeepMind, and Anthropic. In February, it released Grok 3, a cutting-edge AI model performing competitively with leading industry benchmarks in fields such as math, science, and coding.
Despite xAI’s successes, Musk continues to challenge OpenAI, a company he co-founded with Sam Altman. He is attempting to disrupt OpenAI’s transition to a for-profit model, necessary for its future funding. Musk’s attempts include making this transition central to a lawsuit against OpenAI and submitting a $97 billion takeover bid for Altman’s startup. Though OpenAI’s board rejected this proposal, it may have already influenced the market valuation of OpenAI’s assets.
A major advantage for xAI over OpenAI and other startups is its access to the vast data repository of X. The extensive set of posts on X provides xAI with a significant edge in acquiring training data for AI and offers a substantial consumer app platform.
Musk’s tendency to blur lines between his various companies has previously led to legal challenges. However, xAI’s acquisition of X indicates a strategic move to leverage X’s resources to advance Musk’s overarching AI ambitions.
This story has been updated with additional details regarding the structure of the deal.