Elon Musk Claims XAI Acquired X - What Happened?

xAI Acquires X (Formerly Twitter) in All-Stock Deal

Elon Musk’s artificial intelligence company, xAI, has completed the acquisition of his social media platform, X, previously known as Twitter. The transaction was executed entirely through a stock exchange, as announced by Musk on X Friday.

Deal Valuation and Company Futures

Musk stated, “xAI has acquired X in an all-stock transaction.” He further clarified that the combined valuation of xAI is $80 billion, while X is valued at $33 billion, factoring in a $12 billion debt.

The future of both entities is now considered “intertwined,” according to Musk. He emphasized the official integration of resources, stating, “Today, we officially take the step to combine the data, models, compute, distribution and talent.”

Strategic Implications of the Acquisition

This acquisition firmly places X, which Musk purchased in 2022, under the control of xAI. Founded in 2023, xAI was established to directly compete with OpenAI in the rapidly evolving AI landscape.

Prior to this deal, xAI’s products, including the Grok AI chatbot, were already integrated into the X platform. This acquisition represents a further consolidation of two of Musk’s most prominent ventures.

New Holding Company Structure

Reports from publications like The Wall Street Journal indicate that shares of X and xAI will be exchanged for shares in a newly formed holding company, xAI Holdings Corp.

Executives from both companies reportedly agreed that a combined entity would be more attractive to potential investors and facilitate fundraising efforts.

X’s Valuation and Financial Details

Musk notes that X is currently valued at $33 billion, a reduction from its initial enterprise value of $45 billion due to existing debt obligations of $12 billion.

He originally acquired X for $44 billion in October 2022, taking the company private. However, the platform’s valuation has experienced significant fluctuations in recent years, even being assessed at under $10 billion by Fidelity at one point.

Growth in User Base and Platform Influence

Since the inauguration of President Donald Trump – for whom Musk actively campaigned and currently serves as a special advisor regarding DOGE – X’s valuation has increased. This rise is largely attributed to the belief that the platform has become more influential.

Musk announced on Friday that X now boasts over 600 million active users.

xAI’s Rapid Development and Fundraising

Launched in 2023, xAI has quickly assembled a team of leading AI researchers from companies like Google DeepMind, Microsoft, and OpenAI.

The startup has also invested heavily in building the substantial AI data centers necessary to compete with established AI developers. This expansion was supported by a significant fundraising campaign, including a $6 billion round in December that valued xAI at $45 billion.

Currently, xAI’s valuation has risen to $80 billion, according to Musk.

Grok 3 and Competitive AI Models

xAI has made substantial progress in catching up to industry leaders like OpenAI, Google DeepMind, and Anthropic.

In February, the company released Grok 3, a frontier AI model that demonstrates competitive performance against leading AI models in benchmarks assessing math, science, and coding abilities.

Ongoing Disputes with OpenAI

Despite its successes, xAI’s founder, Musk, continues to engage in disputes with OpenAI, a company he co-founded with Sam Altman.

Musk is actively attempting to challenge OpenAI’s transition to a for-profit structure, which is essential for securing future funding. He has initiated a lawsuit centered on this transition and even submitted a $97 billion takeover bid for Altman’s startup in February, which was subsequently rejected by OpenAI’s board.

The Value of X’s Data and User Base

A key advantage for xAI is its access to X’s extensive archive of user posts. This vast dataset provides a significant benefit in the development of AI training data.

Furthermore, X offers a large consumer application through which xAI can directly reach a substantial user base.

Potential Legal and Strategic Implications

Musk has a history of integrating his various companies, a practice that has previously resulted in legal challenges.

With xAI’s acquisition of X, the two companies are now effectively unified, suggesting that X’s primary value may lie in supporting Musk’s broader AI objectives.

This story has been updated to include further details regarding the deal’s structure.