Elon Musk says xAI has acquired X in deal that values social media site at $33 billion

 

Tesla CEO Elon Musk boards Air Force One with U.S. President Donald Trump (not pictured). As they departs for Philadelphia, Pennsylvania, from Morristown Municipal Airport in Morristown, New Jersey, U.S., March 22, 2025. 

Nathan Howard | Reuters

 

Elon Musk said on March 28th, 2025 that his startup xAI has merged with X, his social network, in an all-stock transaction that:

• values the artificial intelligence company at $80 billion
• and the social media company at $33 billion.

“xAI and X’s futures are intertwined,” Musk, the world’s richest person, wrote in a post on X. “Today, we officially take the step to combine the data, models, compute, distribution and talent.”

Unlocking an immense potential

 

He added that the merger would, “unlock immense potential by blending xAI’s advanced AI capability and expertise with X’s massive reach.” The purchase price, he said, was $45 billion less $12 billion in debt.

Because both companies are privately held and controlled by Musk:

• the transaction likely amounts to a stock swap, with X investors getting paid out in xAI shares.

The companies have a number of mutual investors, including venture firms:

• Andreessen Horowitz
• and Sequoia Capital,
• as well as Fidelity Management,
• Vy Capital
• and Saudi Arabia’s Kingdom Holding Co.

Musk, who’s also CEO of Tesla and SpaceX, acquired Twitter in a deal valued at around $44 billion in late 2022. He implemented massive cost cuts and soon renaming it X. Linda Yaccarino, who Musk hired as CEO of X, wrote in a post after Friday’s announcement, “The future could not be brighter.”

xAI goal

Musk launched xAI less than two years ago with a stated goal to “understand the true nature of the universe.” The startup has been trying to compete directly with OpenAI, the richly valued AI startup that Musk co-founded in 2015 as a non-profit research lab. He later left OpenAI and has recently been involved in a public relations and legal spat with the company and CEO Sam Altman over the direction that it’s taken.

At xAI, Musk’s team has been developing large language models and AI software products, taking on offerings from OpenAI as well as Google, Microsoft, Meta and others. X and xAI have already been intertwined, with xAI’s Grok chatbot available to users of the social media app.

Colossus and Environment

In June, xAI announced it would build a supercomputer in Memphis, Tennessee, to train Grok. And in September, Musk revealed part of the Memphis supercomputer, now known as Colossus, was already online.

Environmental and public health advocates have raised concerns about the breakneck speed of xAI’s development in Memphis, citing a lack of community input and oversight. Colossus is powered by natural gas burning turbines and xAI plans to expand and build a graywater facility nearby as well.

Investors valued xAI at around $50 billion in a financing round last year. Bloomberg reported last month that the company was in talks to raise funds at a $75 billion valuation. OpenAI was close to wrapping up a round in February at a $260 billion, while generative AI startup Anthropic was valued at $61.5 billion in a deal that closed this month.

In addition to running:

• Tesla,
• SpaceX
• and xAI
• and overseeing X,

Musk’s role

Musk has spent much of his time this year in Washington, D.C.. He is a central figure in President Donald Trump’s second administration.

After contributing close to $300 million to help Trump and other Republican candidates and causes in the 2024 campaign, Musk was put in charge of the Department of Government Efficiency (DOGE), which is eliminating government jobs, spending and getting rid of regulations. It’s a role that puts Musk in position to make changes that benefit his various businesses.

This isn’t the first time Musk has merged two of his entities.

In 2016, Tesla acquired SolarCity for $2.6 billion. The solar installer was founded by his first cousins, Lyndon and Peter Rive, and funded by Musk, who served as board chair. Tesla shareholders later sued, alleging the deal amounted to a SolarCity bailout, and a breach of fiduciary duty that enriched Musk personally. Delaware judges who heard the dispute decided in favor of Musk and Tesla, and allowed the deal to stand without any remuneration back to the automaker.

WATCH: X acquires xAI