Recently, Elon Musk's artificial intelligence startup, xAI, announced the acquisition of social media platform X (formerly Twitter) in an all-stock deal valued at approximately $45 billion. This figure includes $12 billion in debt, resulting in an implied equity value of $33 billion for X. Musk stated on X that the merger will "combine the strengths of both companies in data, models, compute, distribution, and talent," believing this combination will unlock significant potential by integrating xAI's advanced AI capabilities with X's massive user base.
Both companies are privately held and controlled by Musk, meaning X's investors will be compensated with xAI stock. Some of the institutions already invested in xAI include Fidelity Investments, Andreessen Horowitz, Sequoia Capital, and Kingdom Holding Company. Musk hasn't yet disclosed how X's leadership team will be integrated into the AI research company.
X and xAI are already connected through the Grok AI chatbot, which is integrated into the X platform. Grok was initially trained on public data by xAI, with subsequent versions improved using xAI's Colossus supercomputer located in Memphis, Tennessee. According to an xAI investor, the merger will drive deeper integration of the chatbot with X.
The success of xAI in the AI field will benefit X's co-investors. Musk claims a post-acquisition valuation of $80 billion for xAI, consistent with a $75 billion valuation discussed by Bloomberg last month. Musk co-founded OpenAI in 2015 but left due to conflicts of interest with Tesla's AI development and later disagreed with OpenAI's decision to become a for-profit entity.
X's trajectory has been relatively volatile since 2022. That year, Musk acquired the platform (then Twitter) for approximately $44 billion, subsequently laying off nearly 80% of its workforce to cut costs, significantly altering its content moderation processes, and reinstating several banned accounts, including Donald Trump's. These actions led to the loss of many advertisers who deemed the platform too risky and a significant exodus of users concerned about the surge in hate speech and misinformation.
However, X has recently shown signs of recovery, partly due to its AI association with Grok and xAI, and partly due to improved profit margins. Fidelity valued its stake in X at $13.3 million in February 2025, and the platform has regained a $44 billion valuation.
With Musk's growing influence in the White House, some users have returned to the X platform. As head of the Office of Government Efficiency, Musk's position may influence regulatory scrutiny of the merger. Despite concerns from critics about potential conflicts of interest due to his extensive involvement in multiple private companies, he stated he would distance himself from DOGE by the end of May.
Key Highlights:
🌟 Musk's xAI acquires social media platform X for $45 billion, merging the strengths of both companies.
🤖 xAI and X are already connected through the Grok AI chatbot, and this merger will deepen that integration.
💰 X's valuation has rebounded to $44 billion, and user numbers are growing as Musk's influence in the White House increases.
