Elon Musk merges xAI with X in $113-bn deal

Since both companies are privately held and under Musk’s control, the transaction likely involved a stock swap to compensate X’s investors with xAI shares

by e4m Staff
Published: Mar 29, 2025 9:12 AM | 2 min read

Elon Musk has announced the merger of his artificial intelligence startup, xAI, with his social media platform, X, in an all-stock transaction valuing the combined entity at $113 billion. The deal values xAI at $80 billion and X at $33 billion, with $12 billion in debt included.

Given that both companies are privately held, and are under Musk’s control, the transaction likely involved a stock swap to compensate X’s investors with xAI shares.

“The futures of xAI and X are intertwined,” Musk wrote on X. “Today, we officially take the step to combine data, models, compute, distribution, and talent.” X CEO Linda Yaccarino reinforced this vision, posting that “the future could not be brighter.”

Musk founded xAI less than two years ago with the goal of “understanding the true nature of the universe.” Since then, the company has emerged as a key competitor to OpenAI, which Musk originally co-founded in 2015 but later parted ways with over disagreements about its direction. xAI has been developing large language models and AI software, with its chatbot Grok already integrated into X. The company is also advancing its AI infrastructure with the construction of a supercomputer, Colossus, in Memphis, Tennessee. However, this expansion has raised environmental and public health concerns due to its reliance on natural gas turbines and plans for a graywater facility.

Before the merger, xAI was valued at around $50 billion in a financing round and was reportedly in talks to raise funds at a $75 billion valuation. In contrast, OpenAI’s valuation neared $260 billion in February, while rival Anthropic was recently valued at $61.5 billion.

This strategic consolidation strengthens Musk’s business empire—which includes Tesla and SpaceX—while positioning xAI and X as a formidable force in the AI and social media landscape. The merger aims to leverage xAI’s advanced AI capabilities with X’s massive user base, setting the stage for deeper AI-driven integration across Musk’s platforms.