Elon Musk merges social media platform X with AI startup xAI in $33 billion deal

• Elon Musk merges X with xAI in an all-stock transaction valued at $33 billion, bringing xAI’s valuation to $80 billion
• Both companies share major investors like Andreessen Horowitz, Sequoia Capital, and Saudi Arabia’s Kingdom Holding Co
• The merger aims to reshape digital interactions, combining AI advancements with X’s global reach of 600M users

Billionaire entrepreneur Elon Musk has announced the merger of his artificial intelligence startup, xAI, with his social media platform, X, in an all-stock transaction valued at $33 billion. 

The strategic move raises xAI’s valuation to $80 billion while X is valued at $33 billion.

Both companies, privately owned by Musk, share prominent investors such as Andreessen Horowitz, Sequoia Capital, Fidelity Management, Vy Capital, and Saudi Arabia’s Kingdom Holding Co.

In a post on X, Musk highlighted that the merger would integrate the companies’ data, computing power, distribution channels, and talent to enhance AI-driven experiences while maintaining their mission of 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).

“Since its founding two years ago, xAI has rapidly become one of the leading AI labs in the world, building models and data centres 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 transformed into one of the most efficient companies in the world, 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 integration will unlock immense potential by blending xAI’s cutting-edge AI capabilities with X’s extensive reach. Together, we aim to build a platform that not only reflects the world but accelerates human progress.

“I want to acknowledge the hardcore dedication of everyone at xAI and X who made this possible. This is just the beginning.”

xAI’s expanding role in AI development

Founded less than two years ago, xAI focuses on unraveling the true nature of the universe. 

It has been developing large language models and AI tools, positioning itself as a competitor to OpenAI, the firm Musk co-founded in 2015 before parting ways due to strategic differences.

In June 2024, xAI announced plans to construct a supercomputer, Colossus, in Memphis, Tennessee, to train its AI chatbot, Grok. 

By September, Musk confirmed that a segment of the supercomputer had already gone online.

However, xAI’s rapid expansion has drawn scrutiny from environmental and public health advocates, particularly concerning its Memphis project. 

The Colossus supercomputer relies on natural gas-powered turbines, and plans for a nearby graywater facility have raised concerns about sustainability and community input.

Elon Musk's xAI reportedly set to launch ChatGPT rival

Meanwhile, TheRadar earlier reported that Elon Musk’s artificial intelligence company, xAI, was reportedly on the verge of unveiling a chatbot application designed to rival OpenAI’s ChatGPT. 

The app, launched in December 2024, marked a significant step in Musk’s ongoing competition with the AI giant he co-founded before departing in 2018.