xAI Acquires X in $33 Billion All-Stock Deal. Huh?…

• Elon Musk’s xAI has acquired his social media platform X (formerly Twitter) in an all-stock transaction valued at $33 billion, incorporating $12 billion in liabilities, resulting in a $45 billion gross valuation for X.

• This merger combines xAI’s advanced AI capabilities, including its Grok LLM and Colossus supercomputer (featuring 200,000 NVIDIA H100 GPUs), with X’s extensive user base of 600 million, aiming to create a powerful super app.

• The acquisition comes after Musk took X private in 2022 for $44 billion and follows xAI’s rapid growth and success with its Grok LLM, which is considered comparable to OpenAI’s leading models.

• Musk believes this integration will unlock significant potential by leveraging xAI’s AI expertise and X’s broad reach, despite X’s previous struggles with advertiser confidence and financial uncertainty.

Elon Musk has announced that his AI-focused company xAI has acquired his social media platform X in an all-stock deal, valuing xAI at $80 billion and X at $33 billion after accounting for $12 billion in liabilities. This merger aims to harness the advanced AI capabilities of xAI alongside the extensive reach of X, which has struggled with advertising revenue since Musk took the platform private in 2022 for $44 billion. Following the takeover, X has managed to generate $1.2 billion in adjusted EBITDA in 2024 despite a user base of 600 million.

xAI has positioned itself as a leading AI lab in a short time, achieving technical milestones such as bringing its Colossus supercomputer online in just 122 days, compared to the typical duration of many months to years for similar systems. The company utilizes a large number of NVIDIA H100 GPUs and has swiftly started training its Grok LLM, which is positioned competitively against OpenAI’s models.

The successful merging of X and xAI is seen as a strategic step toward Musk’s vision of creating a super app that integrates multiple functionalities. The development follows criticisms regarding Musk’s management attention on Tesla, with some analysts urging him to focus more on his automotive venture rather than diversifying into AI and social media.