Representational Image
Representational Image
On Friday, the billionaire-investor Elon Musk announced that his artificial intelligence startup, xAI, is acquiring his social media platform, X, in a deal that values the company at $33 billion.
“This combination will unlock immense potential by blending xAI’s advanced AI capability and expertise with X’s massive reach,” Musk posted on X.
X, which has over 600 million users, will now integrate into xAI’s ecosystem, marking a shift in Musk’s broader vision of artificial intelligence and digital communication.
Musk called the merger an "intertwined" future for both entities.
Musk launched xAI two years ago. The startup, which has been developing its chatbot Grok to compete with OpenAI’s ChatGPT, has been scaling fast.
xAI’s latest release, Grok 3, boasts 10 times the computational power of its predecessor and aims to carve out a stronghold in the AI sector, dominated by OpenAI, DeepSeek, and Google’s Gemini.
By merging with X, xAI secures a critical distribution pipeline and vast amounts of user-generated data that can be leveraged to refine its AI models.
“Today, we officially take the step to combine the data, models, compute, distribution, and talent,” Musk said, emphasising the strategic importance of the deal. “This will allow us to build a platform that doesn’t just reflect the world but actively accelerates human progress.”
The acquisition values xAI at $80 billion and X at $33 billion, with the latter still carrying $12 billion in debt.
But the deal has raised concerns among many social media user.
A few users raised privacy issues and asked if posts and personal data on X will now be used to train xAI’s models without consent.
When Musk acquired Twitter for $44 billion in 2022, it was a gamble that saw advertisers fleeing due to concerns over hate speech moderation.
In recent months, major brands such as Amazon and Apple have started reinvesting in X campaigns.
A resurgence in advertiser confidence has helped bondholders recover billions in X’s debt, with recent trades pricing its debt at 97 cents on the dollar.
Reports indicated that X had been in discussions to raise new capital at a valuation of $44 billion.
It remains unclear why xAI is valuing X at a lower $33 billion price point, though analysts speculate that X’s ongoing debt obligations may have played a role.