Author: DeepTech

On Friday local time, Elon Musk said that his AI startup xAI has merged with its social network X (formerly Twitter). According to the statement, the merger is a full-share exchange transaction. The valuation of xAI is $80 billion and X is $33 billion. However, the X platform still has $12 billion in debt, so the cost of the entire xAI transaction will reach $45 billion.

"It's no coincidence to choose $45 billion," D.A. Davidson analyst Jill Luria told the media, "this is $1 billion more than the privatisation transactions on Twitter (now X) in 2022," and Musk can share the value of the xAI business with X's co-investors.

Musk acquired Twitter (now X) at the end of 2022 for about $44 billion, and then he implemented a massive cost cut and quickly renamed it to X. In a 2024 round of financing, investors value xAI at about $50 billion. Bloomberg recently reported that xAI companies are in talks to raise funds at a valuation of $75 billion. Since both xAI and X are privately held and controlled by Musk, the transaction is a stock swap, and investors in X will return the shares of xAI. The two companies have many common investors, including venture capital firms a16z and Sequoia Capital, as well as Fidelity Management, Dubai’s “mysterious” investment firm Vy Capital and Saudi Kingdom Holdings.

"The future of xAI and X are closely linked," Musk wrote in a post on X. "Today, we have officially taken this step to combine data, models, computing, distribution and talent." Musk also said that X has more than 600 million active users. With xAI's acquisition of X, the two companies are now in fact combined into one. The move shows that X's true value may lie in promoting Musk's broader AI vision. X CEO Linda Yaccarino also posted after Friday’s announcement that “the future is incredibly bright.” Musk added that the merger will “unleash tremendous potential by combining the advanced AI capabilities and expertise of xAI with the broad influence of X.” Musk founded xAI less than two years ago with the goal of “exploring the true nature of the universe.” xAI has been trying to expand directly with OpenAIcompete. xAI launched its product Grok shortly after its founding, an AI-powered chatbot. Grok has since been integrated into X. Today, X and xAI are closely connected, and xAI's Grok chatbot has been opened to X users. Many X users now often ask Grok to respond to posts and comment on controversial topics. Although Grok is found to have disagree with Musk on many issues, Musk boasts Grok as an anti-"awakening" AI, saying it is an AI that "pursues truth."

A major advantage over OpenAI and other startups, xAI lies in the ability of users to access X through its product Grok. XThe large number of posts accumulated over the years has given xAI a significant advantage in the competition for AI training data.

In the past few years, xAI has achieved some success in its fanatical efforts to catch up with OpenAI, Google and Anthropic. In February 2025, xAI released the big model Grok 3, which rivals the industry-leading AI models in benchmarks in mathematics, science and programming.

When talking about xAI, we must go further with OpenAI. OpenAI was co-founded by Musk in 2015 as a non-profit research laboratory. Musk later left OpenAI. Recently, Musk had a public relations and legal dispute with OpenAI CEO Sam Altman about his development direction.

Specifically, even if xAI was successful, it did not prevent Musk from interfering in OpenAI's transactions. At present, Musk is trying to hinder OpenAI's profitable transformation in various ways, and completing this transformation is crucial for OpenAI to obtain future financial support. Musk regards OpenAI's profitable transformation as the core content of his lawsuit against OpenAI. Musk also filed a $97 billion acquisition offer in February 2025, claiming to acquire OpenAI, which Ultraman and the OpenAI board quickly rejected, but this may have pushed up the market price of OpenAI assets.

Musk also serves as CEO of Tesla and SpaceX. In addition to managing Tesla, SpaceX and xAI and overseeing X, Musk spent most of this year in Washington, DC, and he is the core figure of President Trump's second term. After donating $270 million to the 2024 U.S. election, Musk was appointed head of the newly formed Department of Government Efficiency, a position that aims to cut spending and repeal some regulations, a position that allows Musk to make changes in ways that benefit his various businesses.

Musk's power in Washington, D.C. by overseeing Trump's cost-cutting measures, X's valuation also rose, mainly because investors believe that the platform is now more influential. It is reported that X's valuation has fallen for a while since its acquisition in 2022, but has rebounded recently. Meanwhile, the value of xAI has risen with the stock prices of companies in the same fields as Nvidia and OpenAI. The Wall Street Journal reported that in one round of financing in November 2024, the valuation of xAI reached $50 billion, more than double the valuation of $24 billion in another round of financing in spring 2024.

In fact, Musk has always had a history of "bluring" the boundaries of many of his companies, which has caused him legal trouble. In 2016, Tesla acquired SolarCity for $2.6 billion. The solar installation company was founded by Musk's cousins ​​Lyndon and Peter Rive and funded by Musk, who himself serves as chairman of the board. Tesla shareholders later filed a lawsuit alleging that the deal amounted to a bailout for SolarCity and breached fiduciary duties and allowed Musk to make personal profits. The US Delaware judge who tried the case ruled to support Musk and Tesla, while allowing the transaction to be established without paying any compensation to Tesla.

In Musk's eyes, the future of xAI and X are intertwined. Regarding this action, he also stated in a post X: "The merged company will provide billions of people with a smarter and more meaningful experience, while adhering to our core mission of seeking truth and advancing knowledge."