Elon Musk has announced an $80 billion merger of his artificial intelligence venture xAI with social media platform X, formerly Twitter, in a move he claims will “unlock immense potential” by combining AI capabilities with real-time user interaction.
The non-cash transaction values xAI at $80 billion and X at $33 billion — or $45 billion when including $12 billion in debt. That figure marks a slight increase over the $44 billion Musk paid to take the platform private in 2022, raising fresh questions about the valuation of X amid ongoing financial challenges.
Musk said the merger would allow the two businesses to better share resources, with X gaining deeper access to AI tools such as chatbot Grok, while xAI will be able to tap into X’s 600 million-strong user base and vast data pool. He described the entities as “intertwined”, stating that the combined company would offer “smarter, more meaningful experiences to billions of people” while remaining committed to “seeking truth and advancing knowledge”.
The merger comes just months after xAI was reported to be in talks to raise $10 billion at a $75 billion valuation. The company, which Musk founded in 2023, has already launched several products including the Grok chatbot and Aurora, a text-to-image model. Early backers include Silicon Valley heavyweights Sequoia Capital and Andreessen Horowitz.
Critics, however, are questioning the rationale behind the deal — particularly given xAI’s lack of a clear revenue stream. Bruce Daisley, former European head of Twitter, called it “a real signal that the AI market is a bubble,” suggesting that Musk may be attempting to shore up X’s valuation amid falling ad revenues and pressure from early investors.
One such investor, Saudi Arabian billionaire Prince Alwaleed bin Talal, confirmed he had requested the merger, citing his role as the second largest investor in both companies. He said the value of his holdings post-merger would exceed $4–5 billion, adding that “the meter is running”.
Since Musk’s acquisition of Twitter and its rebrand to X, the platform has seen a dramatic overhaul. Musk cut thousands of jobs, closed offices, and repositioned the platform as a free speech haven. Although many high-profile advertisers initially pulled out, a recent Emarketer report suggested that X may now be poised for its first year of ad revenue growth under Musk’s ownership.
Despite the mixed results, Musk insists the transformation is working. “X is the digital town square… transformed into one of the most efficient companies in the world,” he said. “xAI has rapidly become one of the leading AI labs, building models and data centres at unprecedented speed and scale.”
X CEO Linda Yaccarino echoed Musk’s optimism, saying: “The future could not be brighter.”
The deal was advised by Morgan Stanley, which served as financial adviser to both X and xAI.
With Musk also heading Tesla, SpaceX, and now serving as Donald Trump’s appointee to the Department of Government Efficiency (Doge), the tech mogul’s latest move cements his ambition to create a tightly integrated ecosystem spanning transportation, AI, aerospace, and digital communication.
