Elon Musk Merges X with xAI in $33 Billion Deal

Elon Musk has announced the merger of his artificial intelligence startup, xAI, with his social media platform, X, in a deal valued at $33 billion. The all-stock transaction pushes xAI’s valuation to $80 billion while consolidating Musk’s vision of integrating AI into digital communication.

Both companies, already under Musk’s ownership, share major investors, including Andreessen Horowitz, Sequoia Capital, Fidelity Management, Vy Capital, and Saudi Arabia’s Kingdom Holding Co. The merger is set to enhance AI-driven experiences across X by leveraging data, computing resources, and talent.

A Bold AI Expansion

Founded less than two years ago, xAI aims to “understand the true nature of the universe” and has been developing advanced AI models to rival OpenAI. Last year, the company announced plans for a supercomputer, Colossus, in Memphis, Tennessee, designed to power its AI chatbot, Grok.

By September, Musk confirmed that part of the supercomputer was operational. However, the project has faced scrutiny from environmental and public health groups over its reliance on natural gas-burning turbines and its proposed use of a graywater facility.

Musk’s Vision for AI and Social Media

Musk took to X to emphasise that the merger aligns with his long-term strategy. “@xAI has acquired @X in an all-stock transaction. The combination values xAI at $80 billion and X at $33 billion ($45 billion less $12 billion debt),” he wrote.

He highlighted X’s transformation, stating, “X is the digital town square where over 600 million active users access real-time sources of truth. In the past two years, it has become one of the most efficient companies globally, primed for scalable future growth.”

Musk believes the merger will unlock “immense potential by blending xAI’s advanced AI capabilities with X’s extensive reach,” promising a future where AI-driven content and interactions redefine digital communication.