The CEO of Tesla and SpaceX announced on the social media platform on Friday that his artificial intelligence company, xAI, has acquired his social media platform, X (formerly known as Twitter) in an all-stock transaction, which will reveal great potential by combining xAI’s advanced AI skills and knowledge with X’s extensive reach. The transaction values X at $33 billion, including $12 billion in debt, while xAI is valued at $80 billion, bringing the total combined valuation to $113 billion.
Why Did xAI Acquire X?
Musk announced the acquisition on X, saying that the “futures are intertwined,” hinting at deeper integration between AI and social media. With this merger, Musk aims to leverage xAI’s advanced artificial intelligence capabilities to enhance X’s functionality. This could mean more AI-driven features, such as automated content moderation, smarter search tools, and AI-powered user interactions.
“The combined company will deliver smarter, more meaningful experiences to billions of people while staying true to our core mission of seeking truth and advancing knowledge,” Musk wrote.
“This will allow us to build a platform that does not just reflect the world but actively accelerates human progress.”
Since buying Twitter for $44 billion in 2022 and rebranding it as X, Musk has made sweeping changes, from mass layoffs to introducing a paid subscription model. Now, with xAI in control, X could shift even further towards becoming an AI-powered “everything app”, potentially incorporating AI chatbots, automated news summaries, and more personalized user experiences.
Nonetheless, experts have mixed opinions on the merger. Some believe it is a natural evolution, combining social media with AI to create a more intelligent and efficient platform. Others question the valuation and wonder whether this will truly benefit users or simply serve as a way for Musk to consolidate power over his companies.
Strategic Restructuring
As per reports from sources like The Wall Street Journal, stocks of X and xAI will be traded for stocks of a new parent company named xAI Holdings Corp. The WSJ further indicates that leaders at both firms thought it would be simpler to secure funding for a unified organization.
In the months following President Donald Trump’s inauguration — a campaign Musk vigorously supported and now serves as a special adviser for DOGE — X’s valuation has increased, mainly because investors think the platform is more powerful now. In his post on Friday, Musk mentioned that X boasts over 600 million active users.
Musk initiated xAI in 2023 and has since enhanced the startup by recruiting top AI researchers from Google DeepMind, Microsoft, and OpenAI, along with establishing large AI data centers necessary to compete with other leading AI developers. To support these initiatives, Musk has engaged in an unprecedented fundraising drive, featuring a $6 billion investment round in December that appraised the startup at $45 billion. Musk claims that xAI’s valuation has now increased to $80 billion.
xAI has predominantly achieved success in its frantic race to keep pace with OpenAI, Google DeepMind, and Anthropic. In February, the startup launched Grok 3, an advanced AI model that competes with the top industry AI models in benchmarks assessing math, science, and coding
However, Musk’s involvement with OpenAI, a startup he co-created with Sam Altman, continues despite xAI’s achievements. Musk is presently attempting to obstruct OpenAI’s shift to a for-profit model — a change necessary for obtaining future funding — through various means. The billionaire founder of xAI has made OpenAI’s shift to a for-profit model the focus of his legal action against OpenAI. In February, Musk also presented a $97 billion offer to acquire Altman’s startup. OpenAI’s board swiftly dismissed the proposal, yet it may have already increased the market value of OpenAI’s assets.
A key benefit that xAI possesses compared to OpenAI and other startups is its access to X. The extensive collection of posts X has gathered over the years provides xAI with an important edge in the competition for AI training data. Additionally, X provides Musk’s AI startup with a large consumer application to connect with users.
Musk has a track record of mixing the operations of his various companies, which has previously led to legal issues. With xAI acquiring X, the two entities are now essentially unified — indicating that X’s real worth might be in furthering Musk’s larger AI goals.
What’s Next?
The integration of xAI and X could shape the future of social media and artificial intelligence, setting new industry standards. However, with past controversies surrounding Musk’s leadership, some critics remain skeptical about whether this move will bring meaningful improvements or just more instability.
As the merger unfolds, all eyes will be on how Musk implements AI within X and whether this bold move reinvents social media—or disrupts it further.
