Elon Musk’s artificial intelligence startup, xAI, has acquired his social media platform X, formerly known as Twitter, in an all-stock transaction. The announcement, made by Musk in a post on X on Friday, marks a significant shift in the integration of AI and social media.
“xAI has acquired X in an all-stock transaction,” Musk stated. “The combination values xAI at $80 billion and X at $33 billion ($45B less $12B debt).” Musk further emphasized the synergy between the two companies, stating, “Today, we officially take the step to combine the data, models, compute, distribution and talent.”
This acquisition places X, one of the world’s most influential social media platforms, firmly under the umbrella of xAI, Musk’s AI startup founded in 2023 to compete with OpenAI. Prior to the acquisition, xAI had already begun integrating its AI chatbot Grok into X. This acquisition brings together all of Musk’s AI developments and social media activities by giving xAI complete access to X’s user data, base, and distribution methods.
Musk’s acquisition of Twitter for $44 billion in 2022 through the X rebranding has resulted in significant valuation adjustments for the site. During a given time period, Fidelity Investment estimated the company’s value to be less than $10 billion. X’s value surged after Donald Trump was elected president, despite the fact that Musk fiercely campaigned for him before to becoming DOGE’s special adviser. The investor view of X improved after Musk said that the platform now had over 600 million active users.
Musk founded xAI in 2023 after strenuous attempts to recruit extremely qualified AI researchers from Google DeepMind, Microsoft, and OpenAI. In order to compete with prominent AI developers, the new startup invested significant money in building AI data centres. xAI received an extra $6 billion in funding in December, increasing its valuation to $45 billion, according to Musk, but he now claims the business is worth $80 billion.
The upstart company has made significant progress in developing its AI algorithms. In February, xAI launched Grok 3, a cutting-edge AI model that achieved performance levels comparable to industry leaders in mathematics, science, and programming. Musk’s business actions extend beyond xAI expansion because he challenges his old enterprise OpenAI, along with its CEO Sam Altman.
Musk sued OpenAI over its plans to become a profit-driven organisation. Elon Musk presented OpenAI with a $97 billion purchase offer in February, which the company’s board rejected. His unsuccessful purchase proposal for OpenAI could have influenced how the firm assessed its market share.
The main advantage of xAI over OpenAI and others is its ability to access X’s huge user-generated content library. The large number of aggregated user posts provides a significant advantage for AI training and places xAI prominently in the AI competition. Through its partnership with X, xAI has an immediate solution to reach millions of consumers via their consumer platform.
Musk has a long history of intertwining his various companies, often leading to legal scrutiny. With xAI’s official acquisition of X, the two companies now operate as one.