Deeper Grok Integration and a Rebound for X
Introduction
Elon Musk’s artificial intelligence startup xAI has formally acquired his social media platform X in an all-stock transaction valued at approximately $45 billion. This figure includes $12 billion in debt, bringing the implied equity value of X to $33 billion.
Combining the Power of xAI and X
The merger will "combine the data, models, compute, distribution, and talent" of the two companies, according to Musk’s announcement on X. "This combination will unlock immense potential by blending xAI’s advanced AI capability and expertise with X’s massive reach," the world’s richest man added.
Private Holding and Compensation
Both companies are privately held and controlled by Musk, so investors in X will be compensated with shares in xAI. Some investors have already invested in xAI, including Fidelity Management & Research, Andreessen Horowitz, Sequoia Capital, and Kingdom Holding Company. Musk has not disclosed how X’s leadership team will be incorporated into the AI research firm.
Integration of Grok AI Chatbot
X and xAI are already linked through the Grok AI chatbot, which is integrated into the X platform. Grok was initially trained by xAI on public data, with its more recent iterations refined using xAI’s Colossus supercomputer in Memphis, TN. An xAI investor told Reuters the merger will lead to deeper integration of the chatbot within X.
Post-Acquisition Value and Valuation
xAI has gained traction in the AI sector, a success that X’s co-investors will now benefit from. Musk claims xAI’s post-acquisition value is $80 billion, which aligns with a projected $75 billion valuation discussed last month, according to Bloomberg.
Musk’s Background in AI
Musk co-founded OpenAI in 2015 but left over conflicts of interest with AI development at Tesla, as well as disagreements regarding OpenAI’s decision to become a for-profit entity. He has since changed his tune on the matter.
X’s Trajectory Since 2022
X’s trajectory since 2022 has been more volatile. That year, Musk acquired the platform — formerly known as Twitter — for roughly $44 billion. He subsequently laid off almost 80% of staff to cut costs, significantly altered content moderation processes, and reinstated a number of banned accounts, including Donald Trump’s. These decisions triggered an exodus of advertisers, many of whom deemed the platform too risky. Users also began leaving in droves amid concerns over a surge of hate speech and misinformation.
X’s Rebound
However, X has bounced back somewhat since then, partly due to its AI associations with Grok and xAI, and partly due to its improved profit margins. Fidelity valued its X stake at $13.30 million in February 2025, and the platform has since re-obtained its $44 billion valuation.
Conclusion
The acquisition of X by xAI marks an exciting new chapter for both companies, with the potential to unlock immense potential by blending xAI’s advanced AI capability and expertise with X’s massive reach. The integration of the Grok AI chatbot within X is expected to lead to deeper integration and improved performance.
FAQs
Q: What is the post-acquisition value of xAI?
A: According to Musk, xAI’s post-acquisition value is $80 billion.
Q: What is the projected valuation of xAI?
A: The projected valuation of xAI is $75 billion, as discussed last month.
Q: What is the reason for Musk’s departure from OpenAI?
A: Musk left OpenAI due to conflicts of interest with AI development at Tesla, as well as disagreements regarding OpenAI’s decision to become a for-profit entity.
Q: What is the current valuation of X?
A: The current valuation of X is $44 billion.
Q: What is the reasoning behind the merger?
A: The merger will "combine the data, models, compute, distribution, and talent" of the two companies, according to Musk’s announcement on X.
