Elon Musk sells X to his AI startup xAI. What does $33 billion merger mean?

Tech billionaire Elon Musk said on March 28 that he has sold social media site X to his own xAI Artificial Intelligence (AI) company in a $33 billion all-stock deal.

“xAI and X’s futures are intertwined. Today, we officially take the step to combine the data, models, compute, distribution and talent,” Musk said in a post on X, formerly known as Twitter.

xAI will pay $45 billion for X, slightly more than Musk paid for it in 2022, but the new deal includes $12 billion of debt.

Musk said that the move will “unlock immense potential by blending xAI’s advanced AI capability and expertise with X’s massive reach.” He said the deal values xAI at $80 billion and X at $33 billion. “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 unprecedented speed and scale,” he said.

Both privately held companies are not required to disclose their finances to the public.

Musk, who also serves as CEO SpaceX and is an advisor to President Donald Trump, bought X, then known as Twitter, for $44 billion in 2022. He ushered in a slew of changes prompting some major advertisers to flee. He laid off 80 per cent of the company’s staff changed policies on hate speech, misinformation and user verification apart from renaming it X.

Musk announced the launch of xAI a year later on July 23.

xAI and X’s futures are intertwined. This combination will unlock immense potential by blending xAI’s advanced AI capability and expertise with X’s massive reach.

“This combination will unlock immense potential by blending xAI’s advanced AI capability and expertise with X’s massive reach,” Musk wrote on X. “The combined company will deliver smarter, more meaningful experiences to billions of people while staying true to our core mission of seeking truth and advancing knowledge,” Musk said.

What changes for X users?

The Tesla CEO didn’t announce any immediate changes to X, although xAI’s Grok chatbot is already integrated into the social media platform, according to CNN.

It’s not clear if the move will affect X users. xAI already uses data from X user posts to train its artificial intelligence models, and paying X users have access to its AI chatbot, Grok.

The merger announcement comes hours after Musk announced that he plans to step down from his role in the Department of Government Efficiency (DOGE) at the end of May after overseeing a massive $1 trillion reduction in the US deficit. Musk, who was brought in by President Donald Trump’s US administration as a “special government employee” for a 130-day term, has been spearheading government cost-cutting efforts as head of DOGE.

Musk has also been working to establish himself as a leader in the AI space, a big focus for both the Trump administration and the tech industry, CNN said. Earlier this year, Musk led a group of investors attempting to purchase ChatGPT maker OpenAI for nearly $100 billion, another escalation in the longtime rivalry between Musk and OpenAI CEO Sam Altman.