In a characteristically brief announcement that carries enormous implications, Elon Musk revealed Friday that his AI startup xAI has acquired social media platform X in an all-stock transaction, valuing the companies at $80 billion and $33 billion respectively.
Key Points:
- xAI valued at $80 billion, X valued at $33 billion in an all-stock merger.
- Merger combines AI capabilities with social media platform’s data and reach.
- xAI’s Grok chatbot already integrated into X, merger expands synergy.
The merger brings together two pillars of Musk's expanding tech empire, formally combining X's massive user base with xAI's artificial intelligence capabilities. "xAI and X's futures are intertwined," Musk wrote on X. "Today, we officially take the step to combine the data, models, compute, distribution and talent."
@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 (@elonmusk) March 28, 2025
Since its founding two years ago, xAI has rapidly become one of the leading AI labs in the world, building models and data centers at…
Behind this corporate maneuver lies a fascinating web of interconnected business strategies and valuation questions. The $33 billion price tag for X represents a significant markdown from the $44 billion that Musk paid to acquire the platform (then Twitter) in 2022. Meanwhile, xAI's $80 billion valuation marks a substantial leap from the $50 billion figure established just four months ago during its last funding round.
For the transation, Musk has positioned X as a data goldmine for AI development rather than purely as a social media business. The platform offers xAI access to content from what Musk claims are 600 million active users – a potentially enormous advantage in the competitive race to train AI models.
The transaction also resolves some awkward financial entanglements between the companies. Prior to the merger, X already owned approximately 25% of xAI, which Musk had granted in exchange for access to X's data. The consolidated structure streamlines these arrangements while giving investors in both companies a stake in the combined entity.
However, the deal's structure has raised eyebrows among corporate governance experts. Unlike traditional mergers between public companies, which typically involve separate teams of advisors representing each side, this transaction featured the same advisers working for both entities: Morgan Stanley and law firm Sullivan & Cromwell.
The merger also creates a simpler story for potential investors. According to The Wall Street Journal, "executives at both companies believed that it would be easier to raise money for a combined entity."
Existing investors, including Andreessen Horowitz, Sequoia Capital, Fidelity, and Saudi Arabia’s Kingdom Holding Co., appear optimistic about this convergence. The combined company will be housed under a new holding structure named xAI Holdings Corp., simplifying fundraising and strategic alignment, according to reporting by The Wall Street Journal.
For Musk, who already juggles leadership roles at Tesla, SpaceX, and his newest position heading the Department of Government Efficiency (DOGE) in the Trump administration, the consolidation may offer pragmatic benefits beyond pure business strategy. By streamlining his portfolio, he potentially reduces the management complexity of running multiple separate entities with overlapping goals and operations.