Elon Musk’s artificial intelligence startup xAI has formally acquired his social media platform X in an all-stock transaction valued at approximately $45 billion. This figure includes $12 billion in debt, bringing the implied equity value of X to $33 billion.
The merger will “combine the data, models, compute, distribution and talent” of the two companies, according to Musk’s announcement on X. “This combination will unlock immense potential by blending xAI’s advanced AI capability and expertise with X’s massive reach,” the world’s richest man added.
Both companies are privately held and controlled by Musk, so investors in X will be compensated with shares in xAI. Some investors have already invested in xAI, including Fidelity Management & Research, Andreessen Horowitz, Sequoia Capital, and Kingdom Holding Company. Musk has not disclosed how X’s leadership team will be incorporated into the AI research firm.
Deeper Grok integration and a rebound for X
X and xAI are already linked through the Grok AI chatbot, which is integrated into the X platform. Grok was initially trained by xAI on public data, with its more recent iterations refined using xAI’s Colossus supercomputer in Memphis, TN. An xAI investor told Reuters the merger will lead to deeper integration of the chatbot within X.
xAI has gained traction in the AI sector, a success that X’s co-investors will now benefit from. Musk claims xAI’s post-acquisition value is $80 billion, which aligns with a projected $75 billion valuation discussed last month, according to Bloomberg.
Musk co-founded OpenAI in 2015 but left over conflicts of interest with AI development at Tesla, as well as disagreements regarding OpenAI’s decision to become a for-profit entity. He has since changed his tune on the matter.
X’s trajectory since 2022 has been more volatile. That year, Musk acquired the platform — formerly known as Twitter — for roughly $44 billion. He subsequently laid off almost 80% of staff to cut costs, significantly altered content moderation processes, and reinstated a number of banned accounts, including Donald Trump’s.
These decisions triggered an exodus of advertisers, many of whom deemed the platform too risky. Users also began leaving in droves amid concerns over a surge of hate speech and misinformation.
However, X has bounced back somewhat since then, partly due to its AI associations with Grok and xAI, and partly due to its improved profit margins. Fidelity valued its X stake at $13.30 million in February 2025, and the platform has since re-obtained its $44 billion valuation.
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Political power meets corporate expansion
Some X users are returning to the platform because of Musk’s increasing influence in the White House as head of the Department of Government Efficiency. This position also grants him the power to potentially influence regulatory oversight of the merger.
SEE: Will Musk’s Ties to Trump & DOGE Lead to Long-Term Problems for Tesla?
When he was announced as a senior government adviser in January, critics raised concerns that his extensive involvement in private enterprises, including Tesla and SpaceX, created significant conflicts of interest, potentially resulting in reduced oversight of his companies or biased decisions in awarding government contracts. Nevertheless, he has suggested that he will step away from DOGE at the end of May.
Musk has merged two of his companies in the past, with the acquisition of solar installation company SolarCity by Tesla in 2016. Tesla shareholders disputed this, arguing that the deal primarily benefited Musk personally as he was the largest shareholder in both companies and accusing him of using Tesla’s resources to bail out a struggling business founded by his cousins.