Elon Musk Merges xAI with X in $80 Billion Deal
Elon Musk, the billionaire entrepreneur behind Tesla and SpaceX, has announced a major merger between his artificial intelligence startup xAI and the social media platform X (formerly Twitter). The all-stock deal values xAI at an estimated $80 billion, far surpassing X's previous valuation of $33 billion.
Musk revealed the news on X, stating: "xAI and X are inextricably linked. Today, we take a crucial step in integrating data, models, computing power, distribution channels, and talent." He emphasized that the merger would unlock "immense potential" by combining xAI's advanced AI technology with X's massive user base.
A Strategic Share Swap
Since both companies are under Musk's control, the merger essentially involves a share swap, with existing X investors receiving proportional stakes in xAI. High-profile investors in both firms include Andreessen Horowitz, Sequoia Capital, Fidelity Investments, Vy Capital, and Saudi Arabia's Public Investment Fund.
Musk acquired Twitter for $44 billion in late 2022, rebranding it as X and implementing aggressive cost-cutting measures. Linda Yaccarino, CEO of X, expressed optimism after the merger announcement, posting: "The future is incredibly bright."
Synergies Between xAI and X
The collaboration between X and xAI has been evident for months. X has already integrated Grok, xAI's AI chatbot, into its platform. Additionally, xAI announced in June 2024 the construction of "Colossus," a supercomputer in Memphis, Tennessee, designed specifically for training Grok. Parts of Colossus became operational by September 2024.
Rapid Valuation Growth
xAI's valuation has skyrocketed in recent months. During a 2024 funding round, it was valued at approximately $50 billion, with recent reports suggesting a potential new round at $750 billion. For context, OpenAI was valued at $260 billion in February 2025, while Anthropic reached $615 billion this month.
The merger solidifies Musk's position as a formidable player in the AI industry, accelerating his efforts to build a dominant AI empire.
Key Points
- Elon Musk merged xAI with X in an all-stock deal valuing xAI at $80 billion.
- The merger integrates AI technology with X's user base and resources.
- Existing X investors will receive proportional stakes in xAI.
- xAI's Grok chatbot is already integrated into X's platform.
- The deal strengthens Musk's competitive edge in the rapidly evolving AI sector.