NewYork: In a groundbreaking corporate maneuver, Elon Musk’s artificial intelligence firm, xAI, has acquired X (formerly Twitter) in a $33 billion all-stock transaction. The deal, announced on Friday, further consolidates Musk’s business empire, uniting his AI venture with the social media platform he acquired in 2022.
The acquisition strengthens Musk’s ability to develop and integrate AI technology within X, particularly through his AI model, Grok. Musk confirmed the merger in a post on X, stating:
“The combination values xAI at $80 billion and X at $33 billion ($45B less $12B debt)”.
He further emphasized the strategic alignment of the two companies, writing:
“xAI and X’s futures are intertwined. Today, we officially take the step to combine the data, models, compute, distribution, and talent”.
Neither company has provided further details on investor compensation, leadership integration, or potential regulatory hurdles.
@xAI has acquired @X in an all-stock transaction. The combination values xAI at $80 billion and X at $33 billion ($45B less $12B debt).
— Elon Musk (@elonmusk) March 28, 2025
Since its founding two years ago, xAI has rapidly become one of the leading AI labs in the world, building models and data centers at…
Analyst Reactions and Financial Implications
Industry analysts have expressed surprise at the rapid development. Paolo Pescatore of PP Foresight remarked:
“This development feels surprising and somewhat unexpected. To a certain extent, it closes a chapter in the turbulent saga of X”.
D.A. Davidson & Co. analyst Gil Luria pointed out a symbolic element of the deal:
“The choice of $45 billion is not a coincidence. It is $1 billion higher than the take-private transaction for Twitter in 2022, and Musk can share the value of the xAI business with Twitter co-investors”.
Musk’s Expanding Influence and Government Ties
Beyond the corporate world, Musk has also consolidated his influence in Washington, D.C., where he oversees the Trump administration’s cost-cutting initiatives as the head of the Department of Government Efficiency (DOGE). This position potentially enhances his ability to interact with regulatory agencies overseeing his business ventures.
One xAI investor, who requested anonymity, told Reuters they were unsurprised by the move:
“This is Musk consolidating his leadership and management across his own companies”.
Musk did not seek investor approval for the acquisition, stating that xAI and X had already been closely collaborating. He expects the merger to deepen AI integration within X.
Rivalry With OpenAI and AI Industry Expansion
Musk’s AI ambitions extend far beyond xAI. Earlier this year, he launched an unsuccessful $97.4 billion bid alongside a consortium to acquire OpenAI, the company he co-founded with Sam Altman in 2015. OpenAI rejected the offer, reaffirming that the startup was not for sale.
Additionally, Musk has taken OpenAI to court, suing to prevent its transition from a non-profit to a for-profit model. However, a federal judge in California recently denied Musk’s request for a preliminary injunction to block the change.
As the AI industry intensifies, xAI has aggressively expanded its infrastructure. The company recently launched Grok-3, its latest chatbot iteration, and is building “Colossus”, a supercomputer cluster in Memphis, Tennessee, touted as the world’s largest.
With the merger, X can serve as a real-time data feed to improve Grok’s training models while also acting as a distribution channel for xAI’s products, further deepening Musk’s control over AI innovation.
X’s Financial Recovery and Debt Strategy
Musk originally acquired Twitter for $44 billion in 2022, subsequently rebranding it as X. Following the acquisition, he slashed its workforce, triggering advertiser pullback and revenue declines. However, brands have begun returning to the platform, coinciding with Musk’s growing government influence.
The financial backing for the original Twitter buyout included $13 billion in loans from seven banks. After two years of holding the debt, the banks offloaded it last month, capitalizing on increased investor interest in AI-linked firms.
“For sure the debt is worth more now, if not fully paid off” ,said Espen Robak, founder of Pluris Valuation Advisors, which specializes in illiquid assets.
Legal Challenges Amid Corporate Restructuring
Despite his strategic victories, Musk continues to face legal challenges. On Friday, a U.S. judge rejected his attempt to dismiss a lawsuit accusing him of defrauding former Twitter shareholders by delaying the disclosure of his initial investment in the company.
As Musk reshapes the AI and social media landscape, the integration of xAI and X signals a new era of AI-driven content moderation, data processing, and user engagement.
