Elon Musk has folded social media platform X, formerly known as Twitter, into his artificial intelligence company xAI in an all-stock transaction that values the combined entity at US$80bn.
Announced on Friday, the deal sees xAI valued at US$80bn and X at US$33bn, reflecting US$45bn in equity value less US$12bn in debt. The merger consolidates control of two of Musk’s flagship ventures and is intended to deepen integration between xAI’s large language model Grok and X’s 600 million active users.
“xAI and X’s futures are intertwined,” Musk posted on X. “Today, we officially take the step to combine the data, models, compute, distribution and talent.”
Both companies are privately held and under Musk’s control. The transaction is structured as a stock swap, with investors in X—such as Andreessen Horowitz, Sequoia Capital, Fidelity, Vy Capital and Saudi Arabia’s Kingdom Holding Co—receiving shares in xAI.
Musk bought Twitter in 2022 for US$44bn and quickly rebranded it as X, implementing sweeping cost cuts, slashing staff and loosening moderation policies. The platform has since lost advertisers but is expected to see its first annual rise in ad revenue since the acquisition, with US sales projected to reach US$1.31bn in 2025.
The latest deal further entrenches Musk’s AI ambitions. Founded in 2023, xAI has raised billions and is developing the Grok chatbot to compete with models from OpenAI, Google, and others. The company recently unveiled Grok-3 and is constructing one of the world’s largest AI supercomputers—known as Colossus—in Memphis, Tennessee.
The acquisition may also pave the way for broader commercial uses of Grok, including as a voice assistant in Tesla vehicles and potentially for in-vehicle gaming, once Tesla’s Full Self-Driving system reaches unsupervised capability.
The merger comes as Musk intensifies his rivalry with OpenAI, which he co-founded in 2015 but later left. A US$97.4bn bid by Musk and others to acquire OpenAI was rejected earlier this year, and Musk has sued the company in California over its move from a non-profit to a for-profit structure.
X already uses Grok to provide AI tools to paying users, and its vast trove of user posts supplies training data for xAI’s models. Analysts suggest the merger will streamline this integration and strengthen xAI’s competitive position in the booming AI sector.
Still, details remain scarce on how the companies will operate post-merger, including leadership structures and investor compensation. Regulatory scrutiny may follow, though Musk’s political influence has grown since being appointed head of the Trump administration’s Department of Government Efficiency (DOGE), a role tasked with cutting regulations and federal spending.
The deal echoes Musk’s 2016 acquisition of SolarCity by Tesla—then a controversial move involving family ties and shareholder lawsuits, which Musk ultimately won in court.
