Elon Musk’s artificial intelligence startup, xAI, has acquired X, formerly known as Twitter, in an all-stock deal. Musk announced the acquisition on Friday through a post on X, revealing that the transaction values xAI at $80 billion and X at $33 billion, factoring in $12 billion in debt.

Musk described the acquisition as a strategic move to merge AI development with social media influence. “Today, we officially take the step to combine the data, models, compute, distribution, and talent,” he stated, emphasizing the interconnected future of both companies.

Following the acquisition, shares of both X and xAI will be exchanged for shares in a newly established holding entity, xAI Holdings Corp. According to The Wall Street Journal, executives from both companies believe this structure will simplify future fundraising efforts.

Musk’s leadership extends across multiple high-profile companies, including Tesla, SpaceX, and Neuralink. His latest move further cements his AI ambitions by placing X under xAI’s control, aligning the social media platform with his broader technological vision.

X’s Valuation Swings and Strategic Importance

Musk originally purchased X for $44 billion in October 2022, but its valuation has fluctuated significantly. At one point, Fidelity estimated its worth at less than $10 billion. However, the platform’s value has rebounded, with Musk claiming that X now has over 600 million active users.

Market perception of X has shifted notably since the inauguration of President Donald Trump, for whom Musk actively campaigned. Musk’s role as a special adviser in the administration has further heightened X’s political and economic influence.

xAI’s Growth and Competitive Positioning

Founded in 2023, xAI has rapidly expanded its capabilities by recruiting top AI researchers from OpenAI, Google DeepMind, and Microsoft. The startup secured $6 billion in funding in December 2024, valuing it at $45 billion. Musk now asserts that xAI’s valuation has climbed to $80 billion.

In February, xAI released Grok 3, an AI model competing with industry leaders like OpenAI and Google DeepMind. The model demonstrated strong performance in benchmarks across mathematics, science, and coding.

Musk’s Conflict with OpenAI and AI Data Advantage

Despite xAI’s growth, Musk has been engaged in a legal and financial battle with OpenAI, a company he co-founded. Musk sued OpenAI over its transition to a for-profit model and attempted a $97 billion takeover bid, which OpenAI’s board swiftly rejected.

One of xAI’s strategic advantages over OpenAI is its direct access to X. The vast repository of user-generated content on the platform provides xAI with a significant edge in AI training data. Additionally, X serves as a powerful distribution channel for xAI’s consumer-facing products, including the Grok chatbot.

Musk has a history of integrating his businesses, often leading to legal scrutiny. With xAI’s acquisition of X, the two companies are now formally unified, furthering Musk’s broader AI ambitions. This move underscores the evolving relationship between artificial intelligence and social media, with Musk positioning xAI as a major player in the AI industry.

PHOTO: REUTERS/DADO RUVIC

This article was created with AI assistance.