Elon Musk said Friday that his startup Xai has merged with social network X.
“The future of Xai and X are intertwined,” Musk, the world’s wealthiest person, wrote in X’s post.
He added that the merger “unlocks immense possibilities by combining Xai’s advanced AI capabilities and expertise with X’s big reach.” He said the purchase price was in debt of $45 billion.
Both companies are managed privately by Musk, so the transaction amounts to a stock exchange, and X investors are paid in Xai stock. The companies have many mutual investors, including venture companies Andreessen Horowitz, Sequoia Capital, Fidelity Management, Vy Capital, and Saudi Arabia’s Kingdom Holding Co.
Musk and CEO are also CEOs. Tesla SPACEX acquired Twitter in late 2022 on a deal worth around $44 billion, implementing massive cost savings and quickly renamed X. Linda Yaccarino.
Musk launched Xai two years ago with the clear goal of “understanding the essence of the universe.” The startup is trying to compete directly with Openai, a wealth of precious AI startup that Musk co-founded in 2015 as a non-profit lab. He later left Openai and recently became involved in public relations and legal spats with the company and CEO Sam Altman, which is what goes around the direction it was taken.
At Xai, Musk’s team develops large language models and AI software products, and is taking on products from Openai. Google, Microsoft, Meta others. X and Xai are already intertwined, and Xai’s Grok chatbot is available to users of social media apps.
In June, Xai announced that he would train Groks by building a supercomputer in Memphis, Tennessee. And in September, Musk revealed that some of the Memphis supercomputers, now known as Colossus, are already online.
Environmental and public health advocates have expressed concern about the ferocious speed of Xai’s development in Memphis, citing a lack of community opinion and surveillance. Colossus will be equipped with a natural gas combustion turbine, and Xai plans to expand and build a greywater facility nearby.
Investors valued XAI at around $50 billion in last year’s funding round. Bloomberg reported last month that the company is in talks to raise funds at a $75 billion valuation. Openai was close to closing the round with $260 billion in February, but in a deal that closed this month, the originating AI startup humanity was valued at $61.5 billion.
In addition to running Tesla, SpaceX and Xai, Musk spent a lot of his time in Washington, DC this year as a central figure in President Donald Trump’s second administration.
After contributing nearly $300 million to support Trump and other Republican candidates and causes in the 2024 campaign, Musk was in charge of Government Efficiency (DOGE). It is his role to put the mask in order to make changes that will benefit his various businesses.
This is not the first time Musk has merged his two entities.
In 2016, Tesla acquired SolarCity for $2.6 billion. The solar installer was founded by his first cousins Lyndon and Peter Liv and funded by Musk, who served as board chairs. Tesla shareholders later sued, claiming that the transaction amounted to a violation of their fiduciary duty to personally enrich Musk. Upon hearing the dispute, a Delaware judge was decided in Musk and Tesla’s favor and allowed the automaker to make a deal without compensation.
Watch: X gets Xai
