Musk's XAI Acquires X In $33B Deal, Consolidating Tech Empire

• Elon Musk has announced that xAI is acquiring X (formerly Twitter) in an all-stock transaction valuing xAI at $80 billion and X at $33 billion.
• The deal comes after X’s valuation had fallen significantly since Musk’s 2022 purchase, with Fidelity estimating its worth at approximately $9.4 billion as of October 2024.
• The merger could help X manage its $12 billion debt burden while giving the combined entity access to new investors and improved valuation prospects. Elon Musk announced Friday that his Artificial Intelligence company xAI has acquired social media platform X in an all-stock transaction. The deal values xAI at $80 billion and X at $33 billion ($45 billion less $12 billion in debt), according to Musk’s statement on the platform he has owned since 2022.

The transaction represents a significant consolidation of Musk’s technology holdings, bringing together the AI firm he launched in July 2023 with the social media platform he purchased for $44 billion in April 2022. The announcement comes after X has experienced substantial valuation challenges under Musk’s ownership.

By October 2024, Fidelity Investments had adjusted the valuation of its stake in X, estimating the company’s overall value to be approximately $9.4 billion – representing a dramatic 79% decline from Musk’s purchase price. While the valuation had recovered somewhat by December 2024, it remained approximately 77% below the original acquisition cost.

In his announcement, Musk positioned the merger as a strategic combination of technological assets. “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,” Musk wrote on X Friday.

The tech entrepreneur described X as “the digital town square” with over 600 million active users. However, the platform has faced growing competition from rival social networks. Meta’s Threads, launched in July 2023, had accumulated over 320 million monthly active users by February 2025. Meanwhile, Bluesky, which launched in February 2023, surpassed 27.44 million users by January 2025, attracting many former Twitter users who departed following Musk’s takeover.

The integration of X and xAI builds upon existing connections between the companies. In July 2024, it was revealed that xAI’s Grok AI model was being trained on X user data, with the setting enabled by default for all accounts though users could opt out.

The announcement prompted skepticism from some observers who questioned the valuation metrics in a transaction between two companies controlled by the same person. “I also sold my 2008 Honda Accord to myself for $1 million,” New York Times tech reporter Ryan Mac said on Bluesky.

Financial analysts suggest the merger may serve practical purposes beyond corporate restructuring. With X still burdened by $12 billion in debt from the original acquisition, integrating it into the xAI corporate structure could provide access to fresh investment capital and create a narrative shift away from Twitter’s troubled post-acquisition period.

Musk, who also leads SpaceX and Tesla, launched xAI in July 2023 with the stated goal of understanding reality, though industry observers have noted his ongoing rivalry with OpenAI CEO Sam Altman as a motivating factor.

“This will allow us to build a platform that doesn’t just reflect the world but actively accelerates human progress,” Musk concluded in his announcement of the merger.

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