Elon Musk's xAI Acquires Hotshot AI to Boost Video Generation

Elon Musk's artificial intelligence venture, xAI, has announced the acquisition of Hotshot, a startup renowned for its advancements in AI-powered video generation. This strategic move is expected to significantly bolster xAI's capabilities in multi-modal AI technology, positioning the company as a formidable player in the rapidly evolving video generation sector.

Hotshot CEO Aakash Sastry confirmed the acquisition on X (formerly Twitter), though financial details remain undisclosed. Founded in 2023 as Natural Synthetics Inc., Hotshot initially focused on AI image generation and editing tools before pivoting to video generation in 2024. The startup has since developed a cutting-edge AI model capable of producing high-quality videos with resolutions of up to 1280x720 pixels and durations of up to 10 seconds.

Hotshot's technological edge lies in its innovative approach to training its AI model. The company utilized 6 million video clips as training data and developed a secondary neural network to automatically generate captions for these videos. This process not only enhanced the model's understanding of video content but also streamlined its training efficiency.

From a technical standpoint, Hotshot employs the bfloat16 data format, which compresses 32-bit information into 16 bits. This optimization reduces the data processing load on the AI model, significantly improving computational efficiency and training speed. The training process spanned four months and leveraged thousands of Nvidia A100 GPUs—a fraction of the resources available through xAI's Colossus supercomputer.

In his announcement, Sastry emphasized that Hotshot will "continue to scale" its video generator development by tapping into Colossus's immense computing power. Located in a 750,000-square-foot facility in Memphis—formerly a home appliance factory—Colossus is xAI's core infrastructure for supporting its AI models. The supercomputer initially launched with 100,000 graphics cards last September and was upgraded three months later to include 200,000 chips and over 1 exabyte (EB) of storage capacity.

xAI has further expanded its infrastructure by acquiring a second site in Memphis earlier this year. The company plans to increase Colossus's graphics card count to 1 million by the end of 2025. As part of this expansion, xAI is reportedly negotiating with Dell Technologies for the purchase of over $5 billion worth of AI servers.

This acquisition aligns with Elon Musk's broader vision for xAI. In January 2025, Musk hinted at plans to release a video generation model within months. The company is expected to offer this technology through its application programming interface (API), running alongside its flagship large language model series, Grok.

The acquisition underscores Musk's commitment to advancing AI technology and signals a new wave of innovation in AI video generation. With Hotshot's expertise and xAI's resources, this collaboration is poised to drive significant breakthroughs and commercial applications in the field.

Key Points

1. xAI has acquired Hotshot AI, enhancing its capabilities in multi-modal AI technology.
2. Hotshot specializes in high-quality video generation using advanced neural networks.
3. The acquisition leverages xAI's Colossus supercomputer for scaling development.
4. xAI plans to expand Colossus with up to 1 million graphics cards by year-end.
5. This move aligns with Elon Musk's vision for integrating video generation into xAI’s offerings.