Elon Musk merges his AI company with X, claims combined value of $US113bn

The Tesla multi-billionaire claims the buyout of the social media platform values the new tech company at more than US$100bn.

Tesla CEO Elon Musk paid $US44bn for Twitter three year ago and rebranded the social media platform X. Picture: AFP

Elon Musk’s artificial-intelligence start-up xAI has acquired X, the social-media platform he also owns, in an all-stock transaction, he said.

The combination values xAI at $US80bn ($127bn) and X at $US33bn, Musk said in a social-media post announcing the acquisition. The AI start-up told investors late last year that it was valued at $US50bn, The Wall Street Journal reported at the time.

The deal combines a Musk-controlled AI company racing to create powerful new tools that could transform the economy and a social-media platform that holds a fire hose of chatter from around the globe. X can serve as a powerful distribution tool for xAI’s products, including its AI chatbot Grok, and provide a valuable feed of real-time data to power the start-up’s models.

“Today, we officially take the step to combine the data, models, compute, distribution and talent,” Musk said. He announced the deal to xAI staff around the time his X post was published, sources familiar with the company said.

A new holding company of X and xAI is expected to be created with this deal, according to people familiar with the structure. There won’t be any change in control of X’s existing debt, the people added.

@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).

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…

— Elon Musk (@elonmusk) March 28, 2025

Earlier this month, X raised roughly $US900m from new and existing investors at a valuation just above its $US44bn takeover price in 2022, according to a person familiar with the fund raise. That valuation effectively set a new benchmark for what X is worth.

X and xAI share many of the same investors, including Sequoia Capital, Vy Capital and Valor Equity Partners. X already owned a large stake in xAI before the acquisition.

Musk launched xAI two years ago with the goal of creating a rival to OpenAI, the non-profit research lab behind ChatGPT. Musk co-founded OpenAI in 2015 before souring on its leadership.

xAI’s first product, Grok, was initially made available only via X and only with a subscription to the social media service, which provided distribution for the late entrant to the space.

Prior to the acquisition, xAI and X had shared some resources, and in xAI’s early days its employees worked out of X’s San Francisco office. xAI has also leased graphic processing units, or GPUs, from X.

Morgan Stanley advised on the deal, along with lawyers at Sullivan & Cromwell, according to people familiar with the matter. Morgan Stanley has close ties to Musk, having advised on his $US44bn acquisition of Twitter (now known as X) and led the financing of that deal.

-Wall Street Journal