Entrepreneur Elon Musk has announced the merger of his artificial intelligence startup, xAI, with his social media platform, X, in an all-stock deal valued at $33 billion.
This move significantly boosts xAI’s valuation to $80 billion, while X is now valued at $33 billion. Both companies remain privately held entities under Musk’s control.
The merger brings together notable investors from both companies, including Andreessen Horowitz, Sequoia Capital, Fidelity Management, Vy Capital, and Saudi Arabia’s Kingdom Holding Co.
Founded less than two years ago, xAI has set out to “understand the true nature of the universe.” The company has been developing large language models and AI tools, positioning itself as a direct competitor to OpenAI—an organization Musk co-founded in 2015 before parting ways due to strategic differences.
In June 2024, xAI announced plans to construct a supercomputer in Memphis, Tennessee, to train its AI chatbot, Grok. By September, Musk revealed that a part of the supercomputer, called Colossus, was already online.
However, xAI’s rapid growth has drawn concern from environmental and public health advocates, who have raised questions about the lack of community involvement in its Memphis project. The Colossus supercomputer runs on natural gas-powered turbines, and xAI plans to further expand operations with a nearby graywater facility.
In a post on X, Musk explained that the merger would leverage the combined resources of both companies—data, computing power, distribution, and talent—to create more advanced AI-driven experiences, while remaining focused on their core mission of advancing truth and knowledge.
“@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).
Since its inception, xAI has rapidly established itself as one of the leading AI labs globally, developing models and data centers at an unprecedented scale and pace.
X serves as the digital town square for over 600 million active users seeking real-time information, and in the past two years, it has transformed into one of the world’s most efficient companies, positioning itself for scalable future growth.
With this merger, xAI and X are poised to unlock immense potential by blending xAI’s cutting-edge AI expertise with X’s vast reach. The combined company will deliver smarter, more impactful experiences for billions of people while staying true to our mission of seeking truth and advancing knowledge. This merger enables us to build a platform that doesn’t just mirror the world, but actively accelerates human progress.
I’d like to recognize the unwavering dedication of everyone at xAI and X who has contributed to reaching this milestone. This is only the beginning,” Musk stated.
