Elon Musk Sells Social Media, X To His AI Startup For $33 Billion

Elon Musk has announced the merger of his artificial intelligence startup, xAI, with his social media platform, X.

The all-stock deal values xAI at a staggering $80 billion, while X is valued at $33 billion. Both companies, privately owned and controlled by Musk, share a roster of high-profile investors, including Andreessen Horowitz, Sequoia Capital, Fidelity Management, Vy Capital, and Saudi Arabia’s Kingdom Holding Co.

Founded less than two years ago, xAI has quickly positioned itself as a formidable competitor to OpenAI—an organization Musk co-founded in 2015 before parting ways due to strategic differences.

With a mission to “understand the true nature of the universe,” xAI has been developing large language models and AI-powered tools, making significant strides in the artificial intelligence landscape.

One of its most ambitious projects is the construction of a supercomputer, Colossus, in Memphis, Tennessee. Announced in June 2024, Colossus is designed to enhance xAI’s chatbot, Grok. By September, Musk confirmed that parts of the supercomputer were already operational.

However, the project has faced scrutiny from environmental and public health advocates, particularly regarding the use of natural gas-burning turbines and the development of a graywater facility.

Musk took to X to share his vision for the merger, emphasizing the synergy between xAI’s technological advancements and X’s expansive user base.

“@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 founding two years ago, xAI has rapidly become one of the leading AI labs in the world, building models and data centers at unprecedented speed and scale.”

“X is the digital town square where more than 600M active users go to find the real-time source of ground truth and, in the last two years, has been transformed into one of the most efficient companies in the world, positioning it to deliver scalable future growth. xAI and X’s futures are intertwined.”

“Today, we officially take the step to combine the data, models, compute, distribution and talent. This combination will unlock immense potential by blending xAI’s advanced AI capability and expertise with X’s massive reach. The combined company will deliver smarter, more meaningful experiences to billions of people while staying true to our core mission of seeking truth and advancing knowledge.”

“This will allow us to build a platform that doesn’t just reflect the world but actively accelerates human progress. I would like to recognize the hardcore dedication of everyone at xAI and X that has brought us to this point. This is just the beginning.”

The merger marks a pivotal moment in the convergence of AI and social media. By integrating xAI’s advanced machine learning models with X’s vast network of over 600 million active users, Musk envisions a future where AI enhances real-time communication, information discovery, and content personalization at an unprecedented scale.

However, as xAI and X move forward, they are likely to face increased regulatory scrutiny, ethical considerations, and public concerns regarding AI-driven content moderation and misinformation. The potential of AI to shape discourse and influence public opinion will undoubtedly be a hot topic as the merged entity evolves.

Elon Musk’s latest move is more than just a business transaction—it’s a strategic leap toward redefining how we interact with technology.

The fusion of AI with a global digital platform could usher in new possibilities for innovation, automation, and knowledge-sharing. But with great power comes great responsibility. As xAI and X embark on this new journey, the world will be watching closely to see whether they can truly advance human progress while maintaining ethical and transparent AI development.