Elon Musk, the global tech giant, announced via his social media platform X that his AI startup, xAI, has merged with X. The all-stock deal catapults xAI's valuation to a staggering $80 billion, significantly exceeding X's previous valuation of $33 billion.
Musk declared on X: "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 this strategic merger aims to "unlock immense potential by combining xAI's cutting-edge AI technology with X's massive user base."
As both xAI and X are controlled by Musk, the merger essentially represents a share swap, with existing X investors receiving a proportional stake in xAI. Notably, both companies share numerous high-profile investors, including Andreessen Horowitz, Sequoia Capital, Fidelity Investments, Vy Capital, and the Public Investment Fund of Saudi Arabia.
Musk, also at the helm of Tesla and SpaceX, acquired Twitter (now X) for approximately $44 billion in late 2022, implementing significant cost-cutting measures before renaming it X. Linda Yaccarino, the current CEO of X, posted after the merger announcement: "The future is incredibly bright."
The collaboration between X and xAI has been evident. X has integrated Grok, xAI's popular AI chatbot, for user access. Furthermore, xAI announced in June 2024 the construction of "Colossus," a supercomputer in Memphis, Tennessee, specifically designed for training Grok. Parts of "Colossus" were operational by September of the same year.
It's noteworthy that xAI's valuation has seen rapid growth: approximately $50 billion during a 2024 funding round, with recent reports suggesting a new round at a $750 billion valuation. In comparison, OpenAI's valuation was $260 billion in February this year, while Anthropic's latest valuation this month stands at $615 billion. The xAI-X merger will undoubtedly bolster Musk's competitiveness in the AI arena, accelerating the expansion of his AI empire.