Elon Musk said on Friday that his social network X and his startup xAI had combined in an all-stock deal for $33 billion for the social media company and $80 billion for the artificial intelligence company.
Musk, the richest person in the world, said on X that “xAI and X’s futures are intertwined.” “Today, we formally take the step to integrate the talent, distribution, computation, models, and data.”
“Unlock immense potential by blending xAI’s advanced AI capability and expertise with X’s massive reach,” he continued, referring to the merger. According to him, the purchase price was $45 billion less the $12 billion in debt.
The deal probably amounts to a stock swap, with X investors receiving payment in xAI shares, as both businesses are privately held and under Musk’s management. Fidelity Management, Vy Capital, Saudi Arabia’s Kingdom Holding Co., and venture firms Andreessen Horowitz and Sequoia Capital are among the companies’ mutual investors.
In late 2022, Musk, the CEO of SpaceX and Tesla, paid approximately $44 billion to acquire Twitter. He immediately renamed the company X and implemented significant cost reductions. Following Friday’s announcement, Linda Yaccarino, the person Musk appointed CEO of X, wrote in a post that “the future could not be brighter.”
Musk claimed to want to “understand the true nature of the universe” when he founded xAI less than two years ago. Musk co-founded the highly valued AI startup OpenAI in 2015 as a non-profit research center, and the startup has been attempting to compete directly with it. After leaving OpenAI, he has been embroiled in a legal and public relations dispute with the firm and its CEO, Sam Altman, regarding the company’s recent course.
Musk’s group at xAI has been creating massive language models and AI software solutions, competing with OpenAI’s products as well as those of Google, Microsoft, and Meta and others. Users of the social media platform can now access xAI’s Grok chatbot, demonstrating how X and xAI are already integrated.
xAI declared in June that it would construct a supercomputer in Memphis, Tennessee, for Grok’s training. Additionally, Musk disclosed in September that a portion of the Colossus supercomputer, located in Memphis, was already operational.
Concerns regarding the rapid development of xAI in Memphis have been voiced by environmental and public health experts, who point to a lack of community involvement and supervision. Natural gas-burning turbines power Colossus, and xAI intends to grow and construct a graywater facility close by.
In a funding round last year, investors estimated xAI’s value at about $50 billion. Last month, Bloomberg revealed that the business was negotiating a $75 billion fundraising round. Anthropic, a generative AI business, closed a deal this month valued at $61.5 billion, while OpenAI was on the verge of closing a round in February at $260 billion.
Apart from managing X and directing SpaceX, Tesla, and xAI, Musk has been in Washington, D.C., a lot this year as a key player in President Donald Trump’s second term.
Musk was appointed head of the Department of Government Efficiency (DOGE), which is cutting government spending, employment, and regulations after spending about $300 million to support Trump and other Republican politicians and causes during the 2024 campaign. In this capacity, Musk is able to implement improvements that will help his several companies.
Musk has previously combined two of his businesses.
For $2.6 billion, Tesla purchased SolarCity in 2016. Musk, who was also the board chair, provided funding for the solar installer, which was started by his first cousins Lyndon and Peter Rive. Tesla shareholders later filed a lawsuit, claiming that Musk personally benefited from the deal and that it amounted to a rescue of SolarCity and a breach of fiduciary duty. Judges in Delaware who heard the case ruled in favor of Musk and Tesla, allowing the transaction to proceed without paying the automaker any money.