Elon Musk’s xAI Acquires Social Media Platform X for $33 Billion

Elon Musk's artificial intelligence company xAI has acquired the social media platform X, formerly known as Twitter, in an all-stock deal valued at $33 billion. This acquisition merges cutting-edge AI capabilities with broad social media reach, signifying a strategic move to enhance the functionality and growth potential of both companies.

The deal places xAI's valuation at $80 billion, incorporating $12 billion in debt associated with the acquisition. Support for the purchase comes from significant co-investors, including Andreessen Horowitz and Sequoia Capital, who stand to benefit from xAI's higher value. Musk, who previously acquired X in October 2022 for $44 billion, described the transaction as a crucial step in intertwining the futures of xAI and X.

Despite challenges following Musk's initial acquisition of X, such as workforce reductions exceeding half of the company's employees—including a significant number from India—and warnings about X's difficult revenue situation, xAI is experiencing contrasting growth. The AI firm secured $6 billion in December 2024 from investors like BlackRock, Nvidia, and AMD, boosting its valuation to between $35 billion and $40 billion.

The New York Times reports that X is facing stagnant user growth and unremarkable revenue, with its financial performance described as barely breaking even. In spite of these hurdles, X's CEO Linda Yaccarino remains optimistic about the merger, expressing her belief in its bright potential. By integrating data, models, compute power, channels, and talent, the potential for innovation between xAI and X is considerable.

The acquisition represents a broader strategic initiative to fuse AI technology with social media, aiming to create a platform that leverages the capabilities of both industries for enhanced user experiences and operational efficiency.