Elon Musk’s xAI merges with X, valuing the social media site at $33 billion and AI company at $80 billion.

In Short

Elon Musk’s startup xAI has merged with his social media platform X in an $80 billion deal to enhance their capabilities.

The merger aims to combine xAI’s technology with X’s reach, with plans for a supercomputer in Memphis and existing AI products like the Grok chatbot.

Elon Musk announced that his startup xAI has merged with X, the social media platform he controls, in an all-stock deal that values xAI at $80 billion and X at $33 billion.

Musk stated that the merger aims to combine resources from both companies to enhance their capabilities. He believes this will unlock significant potential by integrating xAI’s advanced technology with X’s broad reach.

The transaction is likely a stock swap since both companies are privately held and controlled by Musk. Investors in X will receive shares in xAI. Both companies share several mutual investors, including Andreessen Horowitz, Sequoia Capital, Fidelity Management, Vy Capital, and Saudi Arabia’s Kingdom Holding Co.

High competition

Musk’s foray into AI began with the establishment of xAI about two years ago, aimed at understanding the universe. xAI has been working to compete with prominent AI companies like OpenAI, a venture Musk co-founded but later distanced himself from due to disagreements.

xAI has developed AI products and aims to enhance its offerings with the merger. The companies are already connected, with xAI’s Grok chatbot available on the X app. xAI also plans to build a supercomputer in Memphis to enhance its AI capabilities, despite concerns from local advocacy groups over the project’s environmental impact.

Musk is also engaged in political activities, having contributed significantly to Donald Trump’s campaign while overseeing a department aimed at reducing government expenditure. This merger follows a previous acquisition strategy he employed with Tesla when it acquired SolarCity in 2016.