Elon Musk Shakes Tech World as xAI Acquires X!
According to Elon Musk in a recent post on X, xAI, his AI startup, has acquired the social media platform X in an all-stock deal, where this acquisition, in the opinion of Musk, would best be described by the merged valuation of xAI at $80 billion and X at $33 billion ($45B less $12B debt).
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He sounds almost poetic when he says, “…henceforth the two companies are intertwined,” adding, “Today we officially take the step to put our data, models, compute, distribution, and talent together.”
With the acquisition, X, the once-popular social media platform with which Musk had a terrible ever-described relationship through his acquirement in 2022 under its former name Twitter, falls effectively and completely within Musk’s competition with OpenAI, which was formed for this purpose in 2023. While xAI’s services, including an AI chatbot Grok, had previously enjoyed tight integration with the X platform, Friday’s acquisition combined two of Musk’s most high-profile companies further.
Musk is also the CEO of Tesla, SpaceX, and Neuralink. Putting in X’s valuation of $33 billion now, X was originally purchased by Musk for $44 billion in October 2022 and was set private. Still, the decrease in valuation has been very volatile for X in the past couple of years. It was at one point even valued by Fidelity at below $10 billion.
Since the inauguration of President Donald Trump, for whom Musk campaigned aggressively and serves now under as a special adviser leading DOGE, the company’s valuation has since risen, in large part due to an investor perception of stronger influence being possessed by the platform these days. The active user population is now over 600 million, Musk claimed in the Friday post.
Musk founded xAI in 2023, recruiting leading AI researchers from Google DeepMind, Microsoft, and OpenAI to make up the kind of workforce that could build the big AI data centers needed to catch up with other frontier AI developers. Musk now seems to be in the middle of the biggest fundraising spree in history for the startup, which includes the landmark $6 billion fundraising round in December that valued the company at $45 billion. According to Musk, the value of xAI is already over $80 billion.
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xAI’s rapid run to closing the gap with the likes of OpenAI, Google DeepMind, and Anthropic has been largely successful. In February, the startup released Grok 3, a frontier AI model that ranks with the mainstream AI models on benchmarks on math, science, and coding.
Meanwhile, Musk’s activities with OpenAI, a startup he had co-founded with Sam Altman, have gained much traction. Musk has been looking to sabotage OpenAI’s transition to a profit-making organization — the same transition that OpenAI needs to comply with in order to draw funders for the future.
The billionaire owner of xAI has spread some dirt around with the OpenAI lawsuit, with his accusations centering on OpenAI’s profit-making transition. In February, Musk mucked up with a $97 billion bid to acquire Altman’s baby. OpenAI’s board turned the idea down outright, but it may have very well inflated the market price of the assets of OpenAI.
OpenAI’s transition to profit-making-funding, besides being, and other issues will definitely lead up to achieving such a calling. The billionaire owner of xAI has included OpenAI’s transition into a profit-making agency as the basis of his lawsuit against OpenAI. In February, the billionaire submitted a $97 billion takeover bid for Altman’s startup. OpenAI’s board promptly rejected the idea, but it already may have driven up the market price for OpenAI’s assets.
One of the major advantages that xAI has over OpenAI and other startups is its access to X. The posts accumulated at X over the years give xAI a huge advantage in the race for AI training data. Well, further on X gives Musk’s AI startup a huge consumer app to reach users in.
His long history of blurring business lines among his numerous companies, too, has landed him into legal trouble in the past. Now that xAI has bought X, the two are effectively one — and this will show that the true value of X lies in considerations much broader than just its own average record as a service.
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