Elon Musk’s artificial intelligence (AI) startup xAI acquired social media platform X for $33 billion on Friday, the latest corporate twist in the world’s wealthiest person’s efforts to consolidate power and roil the booming AI market.
The all-stock deal potentially eases Musk’s ability to train Grok, his AI model that has used data from X posts to train its models since 2023. The X platform could also distribute xAI products, while providing a real-time feed of users’ thoughts, screenshots and other data.
“xAI and X’s futures are intertwined,” Musk wrote on X, announcing the merger. “Today, we officially take the step to combine the data, models, compute, distribution and talent.”
“The combination values xAI at $80bn and X at $33bn ($45B less $12B debt),” added Musk, who is concurrently overseeing the Trump Administration’s cost-slashing efforts as head of the Department of Government Efficiency (DOGE). His authority there has positioned him to ostensibly influence agencies that oversee his business empire that encompasses xAI, X, Tesla Inc., SpaceX, and Starlink.
However, specifics of the xAI-X coupling, such as how investors would be compensated and what role X’s leaders would play in the new firm, remain murky. Neither X nor xAI have commented.
The mega-deal marks a significant moment for both companies, which have been on divergent trajectories since Musk bought then-Twitter for $44 billion in 2022. By late 2024, Fidelity had slashed X’s valuation to just $12 billion. While the rechristened X shed staff and abandoned any form of content moderation after Musk took over, it has hemorrhaged sales, advertising customers, and members. By comparison, xAI recently raised $10 billion in a funding round that values it at about $75 billion.
The deal — roughly a month after Musk led an abortive $97.4 billion consortium bid for OpenAI — is emblematic of intensifying competition for the multitrillion-dollar AI market. Since xAI was launched less than two years ago, it has been ratcheting up capacity of data centers to train more advanced AI models; its Colossus supercomputer cluster in Memphis, Tenn., is considered one of the largest in the world.
In February, xAI debuted Grok-3, the latest version of its chatbot, in an escalating, supercharged rivalry with Chinese AI startup DeepSeek and Microsoft Corp.-backed OpenAI.
Musk, who co-founded OpenAI with CEO Sam Altman in 2015, not only competes with OpenAI but sued the company in federal court in California to prevent it from transitioning from a non-profit to a for-profit business.
The xAI-X combination comes amid reports OpenAI is close to finalizing a $40 billion funding round led by SoftBank Group — with the caveat that OpenAI must finish its transition to a for-profit company by the end of 2025 to receive the full amount, according to published reports. Landing the funding would value OpenAI at $300 billion.
