Tech billionaire Elon Musk has announced that his artificial intelligence startup, xAI, has acquired the social media platform X, which he also controls. The acquisition was confirmed in a Friday post on X, where Musk stated, “@xAI has acquired @X in an all-stock transaction.”
“Since its founding two years ago, xAI has rapidly become one of the leading AI labs in the world, building models and data centers at unprecedented speed and scale,” the tech mogul said. He described X as “the digital town square where more than 600M active users go to find the real-time source of ground truth.”
In late 2022, Musk acquired Twitter, now known as X. Following his takeover, he implemented cost-cutting measures, including far-reaching staff cuts and the renegotiations of contracts, while also relaxing some content restrictions and reinstating certain banned accounts.
Musk noted that X has been transformed into one of the most efficient companies globally, highlighting its potential for scalable growth. He has stated that “xAI and X’s futures are intertwined,” emphasizing the advantages of combining their resources: “Today, we officially take the step to combine the data, models, compute, distribution and talent.”
AI development is one of the priorities of the government of US President Donald Trump, where Musk leads the Department of Government Efficiency (DOGE). According to analysts, the billionaire has been focused on establishing himself as a leader in the AI industry.
Earlier this year, he attempted to lead a group of investors to purchase OpenAI, the creator of ChatGPT, for nearly $100 billion. The company’s CEO Sam Altman, however, rejected the offer. Musk had co-founded OpenAI in 2015 but departed before it gained significant traction, and subsequently launched xAI in 2023.
A significant reversal of X’s fortunes
Big advertisers, who had largely abandoned X after hate speech surged on the platform and ads were seen running alongside pro-Nazi content, have begun to return. (X made several pro-Nazi accounts ineligible for ads following advertiser departures.) Amazon and Apple are both reportedly reinvesting in X campaigns again, a remarkable endorsement from two brands with mass appeal.
The brand’s stabilization helped a group of bondholders, who had been deep underwater in their investments, sell billions of dollars in their X debt holdings at 97 cents on the dollar earlier this month — albeit with exceedingly high interest rates — according to several recent reports.
Bloomberg in February reported that X was in talks to raise money that would value the company at $44 billion. It’s not clear what came of those talks and why xAI is valuing X at less than it could reportedly fetch from investors. X needs to pay down its massive debt load, which Musk on Friday said totals $12 billion.
A big part of why X’s valuation has rebounded in recent months is xAI, which X reportedly held a stake in. Last month, xAI was seeking a $75 billion valuation in a funding round, according to Bloomberg.
But the biggest factor in X’s stunning bounce-back is almost certainly Musk himself: Musk’s elevation to a special government employee under President Donald Trump has empowered the world’s richest person with large sway over the operations of the federal government, which he has rapidly sought to reshape.
Investors betting on X are probably making a gamble on its leader, not its business. Last year, Musk turned X into a pro-Trump machine, using the platform to boost the president’s campaign. In posts to his 200 million followers, he pushed racist conspiracy theories about the Biden administration’s immigration policies and obsessed over the “woke mind virus,” a term used by some conservatives to describe progressive causes.
And now, with Trump back in office and Musk working in the executive branch, X has once again become the most important social media platform for following and interacting with the Trump administration. Musk has also used X to broadcast some of his changes with his Department of Government Efficiency.
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