Elon Musk Announces xAI's Acquisition of X

Elon Musk's AI startup, xAI, has taken over his social media platform X, previously known as Twitter, in a deal that swapped stocks, he shared on X last Friday. "Through an all-stock deal, xAI has acquired X," Musk posted. "This merger pegs xAI's value at $80 billion and X at $33 billion, after accounting for $12 billion in debt, down from a $45 billion enterprise value." Musk described the future of both companies as "intertwined," saying, "We're now officially merging our data, models, computing power, distribution channels, and talent." This acquisition brings X, the influential social media platform Musk bought in 2022 when it was still called Twitter, fully under the wing of xAI, which he started in 2023 to rival OpenAI. Although xAI's products, like its AI chatbot Grok, were already deeply woven into the X platform, this Friday's acquisition tightens the bond between two of Musk's most prominent ventures. Reports from outlets like The Wall Street Journal suggest that shares of X and xAI will be swapped for shares in a new entity called xAI Holdings Corp. The WSJ also notes that leaders from both companies believe it'll be simpler to secure funding for this merged outfit. Musk, who also heads Tesla, SpaceX, and Neuralink, mentioned in his post that the deal values X at $33 billion, a drop from its $45 billion enterprise value due to its $12 billion debt. Musk snapped up X for $44 billion back in October 2022 and took it private. However, X's valuation has been all over the place lately. At one point, Fidelity pegged it at under $10 billion. Since President Donald Trump took office — with Musk's vigorous support and now serving as a special adviser leading DOGE under him — X's value has climbed, thanks to investors seeing the platform as more influential. Musk noted in his Friday post that X now boasts over 600 million active users. Musk kicked off xAI in 2023 and has since bolstered the startup with top AI researchers from Google DeepMind, Microsoft, and OpenAI, and constructed massive AI data centers to keep pace with other leading AI developers. To fund these efforts, Musk embarked on a massive fundraising spree, including a $6 billion round in December that valued the startup at $45 billion. According to Musk, xAI's valuation has now soared to $80 billion. xAI has made significant strides in catching up with OpenAI, Google DeepMind, and Anthropic. In February, they launched Grok 3, a cutting-edge AI model that holds its own against the industry's top models in math, science, and coding benchmarks. Yet, Musk hasn't stopped stirring the pot with OpenAI, a company he co-founded with Sam Altman. He's actively trying to block OpenAI's shift to a for-profit model — crucial for securing future funding — through various means. Musk's lawsuit against OpenAI centers on this transition, and he even threw a $97 billion takeover bid at Altman's startup in February. OpenAI's board quickly shot down the offer, but it might have already bumped up the market value of OpenAI's assets. One of xAI's big advantages over OpenAI and other startups is its access to X. The vast collection of posts on X gives xAI a huge edge in the race for AI training data. Plus, X provides Musk's AI startup with a massive consumer app to connect with users. Musk has a track record of mixing up his companies, which has gotten him into legal hot water before. With xAI's acquisition of X, the two are now essentially one — and this move hints that X's real worth might be in fueling Musk's wider AI goals. *This story has been updated with more details about the deal's structure.*

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