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 deal brings xAI’s valuation to $80 billion, while X is valued at $33 billion.
Both companies, privately held under Musk’s control, share notable investors, including Andreessen Horowitz, Sequoia Capital, Fidelity Management, Vy Capital, and Saudi Arabia’s Kingdom Holding Co.
Founded less than two years ago, xAI focuses on developing large language models and AI tools, positioning itself as a direct competitor to OpenAI—a company Musk co-founded in 2015 before departing over strategic differences. The company’s stated mission is to “understand the true nature of the universe.”
In June 2024, xAI announced plans to build a supercomputer in Memphis, Tennessee, to train its AI chatbot, Grok. By September, Musk revealed that part of the supercomputer, named Colossus, was already online. However, xAI’s rapid expansion has drawn criticism from environmental and public health advocates, who cite a lack of community input in its Memphis project. The Colossus supercomputer is powered by natural gas-burning turbines, and xAI plans to expand operations with a nearby graywater facility.
Musk, in a post on X, said the merger would integrate the companies’ data, computing power, distribution, and talent to create more advanced AI-driven experiences while staying true to their core mission of truth-seeking 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),” Musk wrote.
He described xAI as one of the world’s leading AI labs, rapidly building models and data centers at an unprecedented scale. Meanwhile, X, with its 600 million active users, 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,” Musk stated. “This combination will unlock immense potential by blending xAI’s advanced AI capabilities with X’s massive reach. The combined company will deliver smarter, more meaningful experiences to billions while accelerating human progress.”
He also praised the dedication of employees at both companies, adding, “This is just the beginning.”
