Startup Lagos

04-Apr-2025

Acquisition

Elon Musk Sells X To His AI Startup For $33b 3 weeks ago

In a groundbreaking move, entrepreneur Elon Musk has announced the merger of his artificial intelligence startup, xAI, with his social media platform, X, in an all-stock transaction valued at $33 billion. This merger elevates xAI's total valuation to $80 billion, while X itself is valued at $33 billion.

Both companies operate under Musk's ownership and share a roster of notable investors, including Andreessen Horowitz, Sequoia Capital, Fidelity Management, Vy Capital, and Saudi Arabia's Kingdom Holding Co.

Founded less than two years ago, xAI aims to "understand the true nature of the universe" and has been focusing on the development of large language models and advanced AI tools, positioning itself as a direct competitor to OpenAI—a company Musk co-founded in 2015 before stepping away due to strategic differences.

In June 2024, xAI revealed plans to construct a supercomputer in Memphis, Tennessee, designed to train its AI chatbot, Grok. By September, Musk announced that a portion of the Memphis-based supercomputer, dubbed Colossus, was operational.

However, xAI's rapid expansion has attracted scrutiny from environmental and public health advocates, who have raised concerns about a perceived lack of community engagement regarding its Memphis project. The Colossus supercomputer operates using natural gas-burning turbines, and xAI intends to bolster its operations with a nearby graywater facility.

In a post on X, Musk emphasized that the merger would leverage both companies' data, computing power, distribution capabilities, and talent to foster more advanced AI-driven experiences while adhering to their core mission of truth and knowledge advancement.

"@xAI has acquired @X in an all-stock transaction. The combination values xAI at $80 billion and X at $33 billion ($45 billion less $12 billion debt)," Musk stated.

He further elaborated, "Since its founding two years ago, xAI has rapidly emerged as one of the leading AI labs in the world, developing models and data centers with unprecedented speed and scale. X is the digital town square where over 600 million active users go to access real-time sources of truth, and in the past two years, it has transformed into one of the most efficient companies globally, primed for scalable future growth."

Musk concluded by highlighting the synergistic potential of the merger, stating, "The futures of xAI and X are now intertwined. Today, we officially take the step to combine our data, models, compute resources, distribution, and talent. This combination will unlock immense potential by blending xAI's advanced AI capabilities with X's extensive reach, enabling us to deliver smarter, more meaningful experiences to billions while remaining committed to our mission of advancing knowledge."

This merger marks a pivotal moment in the intersection of social media and artificial intelligence, with the potential to reshape the landscape of how information is disseminated and consumed worldwide.

Play audio

Share:

Comments

No comments

Add your comment

Search Blog

Categories

Recent Posts

Related Post

Solutions

Stay Connected