Elon Musk’s artificial intelligence company, xAI, has acquired X—the social media platform formerly known as Twitter—for $33 billion. This latest move further consolidates Musk’s control over multiple companies, including Tesla and SpaceX, and strengthens xAI’s ability to train its AI model, Grok.
Elon Musk’s xAI Acquires X in $33 Billion Deal to Boost AI Development
Musk announced the transaction on X, stating that the acquisition values xAI at $80 billion and X at $33 billion. This price includes the original $45 billion Musk paid to acquire Twitter in 2022, minus $12 billion in debt. The deal is structured as an all-stock transaction, meaning no direct cash was exchanged.
He explained that xAI and X will work closely together to integrate their data, computing resources, models, and talent. This move suggests that the AI company will rely heavily on the social media platform to gather real-time user interactions and feedback, potentially giving xAI a competitive edge in the artificial intelligence race.
However, many aspects of the merger remain unclear. It is uncertain how X’s leadership will be integrated into xAI, how investors will be compensated, or whether the deal will face regulatory scrutiny.
Market and Industry Reactions
Analysts have mixed reactions to the merger. Paolo Pescatore of PP Foresight called the development surprising but acknowledged that it marks the closing of a chapter in X’s turbulent history under Musk’s leadership. Meanwhile, DA Davidson & Co analyst Gil Luria pointed out that the $45 billion valuation of X in the deal is symbolic, as it is slightly higher than Musk’s original acquisition price, allowing him to justify xAI’s worth to investors.
An investor in xAI, who spoke anonymously to Reuters, said they were not surprised by the acquisition. According to them, Musk has been consolidating control over his businesses, ensuring closer collaboration between them. The investor also noted that Musk did not seek approval from other stakeholders before announcing the deal, reinforcing his hands-on leadership approach.
Musk’s Growing Influence
Beyond his business empire, Musk has also gained influence in U.S. politics. He currently oversees the Department of Government Efficiency (nicknamed “Doge”) under the Trump administration. This role positions him to potentially shape policies that impact his companies, including AI regulations and corporate oversight.
His push into AI is not new. Earlier this year, Musk attempted to acquire OpenAI, the company behind ChatGPT, for $97.4 billion. However, OpenAI rejected the offer, stating that the company was not for sale. Musk, who co-founded OpenAI in 2015, has since sued the organization, arguing that its transition from a nonprofit to a for-profit entity is against its original mission.
Implications for AI and Social Media
With this acquisition, xAI gains access to a massive stream of user-generated data from X, which can be used to improve its AI products, including Grok-3, the latest version of its chatbot. Additionally, xAI’s supercomputer cluster, Colossus, based in Memphis, Tennessee, is reportedly the largest in the world, signaling Musk’s ambition to dominate AI research.
The merger may also help X financially. Since Musk’s takeover in 2022, the platform has struggled with advertiser losses and declining revenue. However, in recent months, some brands have been returning, partially due to Musk’s increased political influence.
Meanwhile, banks that lent Musk $13 billion to buy X have managed to offload the debt to investors, who are now expected to profit as X’s value stabilizes.
Legal and Regulatory Challenges
Despite the deal, Musk continues to face legal challenges. A U.S. judge recently rejected Musk’s attempt to dismiss a lawsuit that claims he misled Twitter shareholders by delaying disclosure of his investment. Additionally, regulatory bodies may scrutinize the xAI-X merger, given its implications for data privacy and market competition.
Our Thoughts:
Musk’s acquisition of X through xAI marks another bold move in his business strategy, combining artificial intelligence with social media. While the deal could accelerate AI advancements, it also raises concerns about data privacy, market control, and regulatory oversight. The coming months will reveal whether this integration benefits Musk’s AI ambitions or leads to further controversy.
