Elon Musk announced on Friday evening that he has sold his social media company, X (formerly Twitter), to his artificial intelligence firm, xAI. The deal values X at $33 billion, with xAI paying a total of $45 billion, including $12 billion in debt.
Musk stated on his X account, “xAI and X’s futures are intertwined. Today, we officially take the step to combine the data, models, compute, distribution, and talent. This combination will unlock immense potential by blending xAI’s advanced AI capability and expertise with X’s massive reach.”
The acquisition signifies a strategic alignment of Musk’s AI ambitions, as xAI’s Grok chatbot is already integrated into X. Musk believes the merger will create “smarter, more meaningful experiences,” valuing the combined entity at approximately $80 billion.
Since Musk acquired X in 2022, the platform has undergone significant changes, including substantial layoffs, controversial content moderation decisions, and an overhaul of its verification system. These moves initially resulted in major advertisers withdrawing from the platform; however, recent stabilization efforts have attracted back influential brands such as Amazon and Apple.
The sale of X comes amidst Musk’s growing involvement in government initiatives, notably his role at the Department of Government Efficiency under the Trump administration. This shift raised questions about Musk’s attention to his businesses, particularly Tesla, prompting speculation that integrating X and xAI could streamline his operations.
X’s Revival and Strategic Positioning
X’s valuation recovery is largely attributed to Musk’s increased influence through his governmental role and the renewed advertiser confidence. Last year, X struggled with a steep decline in its valuation, estimated by Fidelity to be approximately 80% lower than Musk’s original purchase price. Recent improvements, however, led to a rebound and the current strategic acquisition.
Musk’s recent efforts to dominate the AI market, including attempts to purchase OpenAI, further highlight his competitive strategy. This new merger positions Musk to leverage X’s platform and rapidly deploy advanced AI technologies to a broader audience, significantly reshaping the digital landscape.
Investors appear to be betting on Musk’s leadership rather than purely business metrics, given his influence within the Trump administration and his strategic use of X as a communication tool aligned closely with the current administration’s agenda.