Elon Musk announced on Friday that his AI startup, xAI, has officially merged with his social network, X, in an all-stock transaction. This merger, valued at $80 billion for xAI and $33 billion for X, signals a transformative moment in both the AI and social media sectors.
In a post on X, Musk, who is the world’s richest person, shared his vision for the merger. “xAI and X’s futures are intertwined,” he wrote. “Today, we officially take the step to combine the data, models, compute, distribution and talent.” Musk emphasized that this merger would blend xAI’s AI expertise with X’s massive global reach, unlocking immense potential for both companies.
The $80 billion deal will combine xAI’s cutting-edge AI technology with X’s vast social media platform. Musk explained that the $45 billion purchase price was offset by $12 billion in debt. Since both companies are privately held and controlled by Musk, the deal likely involves a stock swap, where X investors will receive shares in xAI. Notably, the companies share several investors, including venture firms Andreessen Horowitz, Sequoia Capital, and Fidelity Management.
Musk, who also leads Tesla and SpaceX, acquired Twitter in late 2022 for $44 billion, rebranding it as X. After the announcement of the merger, X CEO Linda Yaccarino, whom Musk hired, expressed excitement for the future: “The future could not be brighter.”
xAI, launched by Musk less than two years ago, aims to compete with AI giants like OpenAI, Google, Microsoft, and Meta. Musk’s team at xAI has been developing large language models and AI products, positioning the company to challenge established players in the industry. One of the company’s notable offerings, the Grok chatbot, is already integrated into the X platform, allowing users to interact with AI directly.
In June, xAI revealed plans to build a supercomputer in Memphis, Tennessee, to train Grok. By September, part of the supercomputer, now called Colossus, was already online. Despite the excitement, some local environmental and public health advocates have raised concerns about the rapid pace of development in Memphis. Critics have cited the lack of community input and the environmental impact of Colossus, which runs on natural gas turbines.
Investors valued xAI at $50 billion in a financing round last year, and recent reports suggested that the company was in talks to raise funds at a $75 billion valuation. Meanwhile, OpenAI was valued at $260 billion earlier this year, and generative AI startup Anthropic raised funds at a valuation of $61.5 billion.
Beyond his work with Tesla, SpaceX, xAI, and X, Musk has been heavily involved in politics. As a major donor to the 2024 U.S. presidential campaign, he has contributed nearly $300 million to Republican candidates and causes. Musk was recently appointed head of the Department of Government Efficiency (DOGE), tasked with eliminating government jobs, reducing spending, and rolling back regulations. This role could have significant implications for his businesses.
This is not the first time Musk has merged his companies. In 2016, Tesla acquired SolarCity, a solar installer founded by his cousins, for $2.6 billion. Despite lawsuits from shareholders, who alleged the deal was a bailout, the courts sided with Musk and allowed the transaction to stand.
The xAI and X merger represents a bold move in the tech world, with the potential to redefine how artificial intelligence interacts with social media. As AI continues to evolve, this deal could pave the way for a new era of integrated technology, enhancing user experiences and reshaping the digital landscape.
