Elon Musk’s AI startup xAI is taking over the social media platform X, also owned by Musk, through a share swap agreement. Musk reports this in a message on X.
Musk stated that xAI took over X in a transaction in which only shares were used and that the combination values xAI at 80 billion dollars and X at 33 billion dollars. The CEO clarified that X’s original value was 45 billion dollars. However, this was reduced due to 12 billion dollars in debts.
Musk described the future of the two companies as closely intertwined. He added that both companies are now officially taking steps to combine data, models, computing power, distribution and talent.
Grok was already strongly integrated into X
This acquisition means that X, the social media platform that Musk bought in 2022 under the name Twitter, now falls completely under the umbrella of xAI. Musk founded xAI in 2023 to compete with OpenAI. Although xAI’s products, including the AI chatbot Grok, were already deeply integrated into the X platform, this acquisition brings two of Musk’s most prominent companies even closer together.
According to various media outlets, the shares of X and xAI will be converted into shares of a new parent company called xAI Holdings Corp. Executives from both companies believed it would be easier to raise capital for a combined company.
Musk bought X for 44 billion dollars and took the company private. However, the valuation of the platform has fluctuated greatly in recent years. At one point, investment company Fidelity even valued X at less than 10 billion dollars.
Value of X increased after Trump’s election
Since the inauguration of President Donald Trump, for which Musk actively campaigned and for which he now serves as special advisor leading DOGE, the value of X has risen. This is largely because investors are convinced that the platform now has greater influence. Musk stated on Friday that X has more than 600 million active users.
Musk launched xAI in 2023 and has since assembled a team of leading AI researchers from Google DeepMind, Microsoft and OpenAI. He has also built up enormous AI data centers to compete with other leading AI developers. To finance these efforts, he launched an unprecedented fundraising program, including a $6 billion funding round in December, valuing the company at $45 billion. According to Musk, the valuation of xAI has since risen to $80 billion.
xAI made great progress in the race to catch up with OpenAI, Google DeepMind and Anthropic. In February, the company released Grok 3, an advanced AI model that can compete with the leading AI models in the sector according to benchmarks in the fields of mathematics, science and programming.
The battle with OpenAI continues
Despite the success of xAI, Musk continues to interfere with OpenAI, the company he founded with Sam Altman. He is trying in various ways to stop OpenAI’s transition to a profit-oriented model, a step that is necessary to secure funding in the future. His legal battle against OpenAI largely revolves around this transition. In addition, Musk made a $97 billion takeover bid for OpenAI in February. The OpenAI board quickly rejected the offer, but it may have driven up the market price of OpenAI’s assets.
X provides training data
One of the major advantages that xAI has over OpenAI and other startups is access to X. The vast amount of data that X has collected over the years gives xAI a significant head start in the race for AI training data. What’s more, X allows Musk’s AI startup to use a large consumer platform to reach users.
Musk has a history of blurring the lines between his various companies, which has gotten him into legal trouble before. Now that xAI has acquired X, the two companies have effectively merged. This move suggests that the true value of X may lie in supporting Musk’s broader AI ambitions.