Entrepreneur Elon Musk has announced the merger of his artificial intelligence startup, xAI, with his social media platform, X. Which is an all-stock transaction valued at $33 billion.
This move brings xAI’s valuation to $80 billion, while X is valued at $33 billion. Both companies are privately held under Musk’s control.
The two companies share notable investors. Which includes Andreessen Horowitz, Sequoia Capital, Fidelity Management, Vy Capital, and Saudi Arabia’s Kingdom Holding Co.
Founded less than two years ago, xAI aims to “understand the true nature of the universe”. They had been developing large language models and AI tools. Thereby, positioning itself as a direct competitor to OpenAI, which Musk co-founded in 2015 before exiting due to strategic differences.
In June 2024, xAI announced plans to build a supercomputer in Memphis, Tennessee, to train its AI chatbot, Grok. By September, Musk revealed that part of the supercomputer, called Colossus, was already online.
Elon Musk, in a post on X, stated that the merger would combine data, computing power, distribution, and talent. So as to create more advanced AI-driven experiences while staying committed to truth and knowledge advancement.
@xAI has acquired @X in an all-stock transaction. The combination values xAI at $80 billion and X at $33 billion ($45B less $12B debt).
Elon Musk
It was founded two years ago. Since then, xAI has rapidly become one of the leading AI labs in the world, building models and data centers at unprecedented speed and scale.
X is the digital town square where more than 600M active users go to find the real-time source of ground truth. Over the last two years, it has been transformed into one of the most efficient companies in the world. Thereby, positioning it for scalable future growth.
xAI and X’s futures are intertwined. Today, we officially take the step to combine the data, models, compute, distribution, and talent. This will unlock immense potential by blending xAI’s AI capabilities with X’s massive reach. The combined company will deliver smarter, more meaningful experiences to billions of people while accelerating human progress. I would like to recognize the hardcore dedication of everyone at xAI and X that has brought us to this point. This is just the beginning.”
Elon Musk
This sale is essentially Elon Musk transferring ownership from one of his companies to another—both of which he controls. It’s not a typical “sale” where ownership changes hands between different parties. Instead, it’s more of a corporate restructuring where Musk is consolidating assets under xAI.
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What This Means in Practical Terms
Stock Transaction, Not Cash: This was an all-stock transaction. Meaning, xAI “bought” X by issuing shares rather than Musk receiving cash.
Musk Still Owns Everything: Since both companies were already his, he isn’t really “selling” in the usual sense. He’s just moving ownership from one entity to another.
Valuation Adjustment: By shifting X under xAI, Musk positions xAI as a more valuable company ($80B vs. $33B). Thereby, making it look stronger for potential investors or future fundraising.
Strategic Positioning: This move allows Musk to integrate X’s vast real-time data into xAI’s AI training pipeline more efficiently.
In short, this is financial and strategic restructuring rather than a real sale. Musk is repackaging his assets to better fit his long-term AI ambitions.
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