Elon Musk Merges xAI and X in $33 Billion All-Stock Deal
Elon Musk’s artificial intelligence firm, xAI, has acquired his social media platform X, formerly known as Twitter, in an all-stock deal valued at $33 billion. This latest move strengthens Musk’s hold over his expanding tech empire, which also includes Tesla and SpaceX.
The acquisition is expected to make it easier for Musk to develop xAI’s AI model, Grok, by merging data, computing power, and distribution.
Strengthening AI Ambitions
Musk announced the merger on X, stating the combined value of the deal places xAI at $80 billion and X at $33 billion, after accounting for $12 billion in debt. He wrote, “xAI and X’s futures are intertwined. Today, we officially take the step to combine the data, models, compute, distribution and talent.”
While the finer details of the deal remain unclear, such as the impact on X’s current leadership and investor compensation, it signals a strong step toward integrating Musk’s ventures.
An investor in xAI, who wished to remain anonymous, told Reuters the deal came as no surprise, viewing it as part of Musk’s strategy to consolidate control. Musk did not seek investor approval for the merger but said both firms had already been working closely.
A Strategic Push Against OpenAI
Musk’s rivalry with OpenAI continues to grow. He co-founded the company in 2015 but later distanced himself. In February, he made a $97.4 billion bid to acquire OpenAI, which was ultimately rejected.
xAI has been actively scaling its infrastructure, including the launch of its advanced AI chatbot Grok-3. The company also boasts a supercomputer cluster named “Colossus” in Memphis, Tennessee, said to be the world’s largest.
Through the integration with X, xAI gains access to real-time user data and a powerful platform for distributing its AI tools. This strengthens its position against competitors such as Microsoft-backed OpenAI and China’s DeepSeek.
X’s Journey Under Musk
Musk acquired Twitter in 2022 for $44 billion, famously declaring, “the bird is freed.” Since then, he has slashed the workforce and faced advertiser pullback. However, some brands have returned as Musk’s influence has grown within the US government.
The banks that financed Musk’s Twitter acquisition held onto $13 billion in loans for two years. They recently sold the debt, helped by rising investor demand for AI-focused firms and X’s improved performance.
Experts believe the value of that debt has since increased. Espen Robak, a valuation specialist, noted that investors who bought the debt are now likely to profit.
In a separate development, a US judge dismissed Musk’s attempt to throw out a lawsuit accusing him of defrauding Twitter shareholders by delaying disclosure of his initial investment.
with inputs from Reuters
