Elon Musk announced on Friday that his artificial intelligence company, xAI, has merged with his social media platform X in an all-stock transaction. The deal values xAI at $80 billion and X at $33 billion. Musk, who controls both companies, emphasized in a post on X that the futures of xAI and X are intertwined. The merger aims to combine xAI’s AI capabilities with X’s vast user base, unlocking significant potential by blending advanced AI with the platform’s wide reach.
The acquisition, valued at $45 billion minus $12 billion in debt, is likely a stock swap, with X investors receiving xAI shares. Both companies share mutual investors, including venture capital firms Andreessen Horowitz and Sequoia Capital, as well as Fidelity Management, Vy Capital, and Saudi Arabia’s Kingdom Holding Co. Musk, who also leads Tesla and SpaceX, acquired Twitter in late 2022 for around $44 billion and rebranded it as X. After the merger announcement, X’s CEO, Linda Yaccarino, expressed optimism about the future of the platform.
xAI was founded less than two years ago with the mission to explore the “true nature of the universe” and directly compete with AI leaders such as OpenAI, which Musk co-founded in 2015. Although Musk left OpenAI years ago, he has been critical of its direction and has since focused on xAI, which has developed large language models and AI products to rival those from Google, Microsoft, Meta, and others. xAI’s Grok chatbot is already integrated into the X platform, and the company is working on a supercomputer in Memphis, Tennessee, known as Colossus, to support its AI ambitions.
Despite these technological advances, environmental and public health groups have raised concerns about xAI’s rapid development in Memphis, citing potential environmental impacts due to the use of natural gas-powered turbines. The company plans to expand its operations and build additional facilities in the area. Last year, investors valued xAI at around $50 billion, and it was in discussions to raise funding at a $75 billion valuation.
Musk, who has been heavily involved in Washington, D.C., this year, also plays a significant role in President Trump’s second administration, overseeing the Department of Government Efficiency, which focuses on reducing government spending and regulations. This merger is not the first time Musk has combined his ventures; in 2016, Tesla acquired SolarCity for $2.6 billion, a deal that faced legal challenges but ultimately stood.
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