Elon Musk Says His AI Company Acquired X at Valuation of $33 Billion

Since buying Twitter and rebranding it as X, tech oligarch Elon Musk has sought to bring the social media platform into alignment with xAI, his artificial intelligence venture. Now, he says, that company has acquired the app, signaling that users’ content and behavior will be core to the AI business.

Musk of course announced the deal in a post on X on Friday, writing, “@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).”

Back in 2023, X updated its policies to reflect that it could collect information from users to train AI models — then, the following year, it made it essentially impossible to opt out of that arrangement. X has also integrated Grok, a chatbot developed by xAI, directly into the platform. The current iteration of the model, Grok 3, includes a search function as well as a feature meant to help with problem-solving in math, science, and coding. Last year, investors who had backed Musk’s Twitter takeover and stood to lose billions as the company’s valuation plunged due to an advertiser exodus triggered by a sharp rise in hate speech and extremism were compensated with a 25 percent stake in xAI.

Musk’s statement on the merger continued: “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 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 claimed that xAI had “become one of the leading AI labs in the world” since it was founded two years ago, while X — where he said he had fired some 80 percent of the workforce upon his arrival in 2022 — was “one of the most efficient companies in the world,” and a place where people can “find the real-time source of ground truth.” In fact, X is a bastion of right-wing misinformation, much of it spread by Musk himself. Grok itself once confirmed this when asked, though it was apparently later “recalibrated” to give a different answer.

Many critics immediately looked askance at the deal because of privacy concerns. Gary Marcus, a psychologist and cognitive scientist who has built two AI companies, replied on X: “This feels like profound news: Like it or not, everything you have ever posted here — and maybe your DMs and maybe your click history — will now potentially go towards training xAI.” Technologist and venture capitalist David Galbraith took a similar view, writing, “If you thought ‘you are the product’ with Google ads, with x.com you are now like a human battery in the Matrix.”

Others found the circular structure of the deal to be suspect. Mark B. Spiegel, an equity investor and portfolio manager at Stanphyl Capital Partners who has long voiced skepticism of Musk’s corporate empire, suggested that the world’s wealthiest man was only covering the exposure he’d created by paying too much for Twitter in the first place ($44 billion, with $13 billion in debt financing): “‘Congratulations,’ xAi ‘investors’!” he wrote. “You just bailed out one of the most egregiously overpriced transactions in history!” Fred Lambert, editor-in-chief of the electric vehicle news site Electrek, which often covers Musk’s automaker Tesla, pointed out that Musk had been able to artificially inflate X’s valuation by making the offer through his other company, calling him “a master of negotiating with himself.”

Now xAI will carry the billions in debt remaining from Musk’s acquisition of Twitter, and it’s far from clear if this self-dealing maneuver will salvage that original deal, with some detractors arguing that both companies are overvalued. Musk was optimistic, however, signing off on his statement with a vague promise: “This is just the beginning.” For now, anyway, the Musk circus will carry on.