Elon Musk’s artificial intelligence company, xAI, has officially acquired social media platform X in a deal that values the platform at $33 billion. This move allows Musk to share xAI’s valuation with co-investors in what was formerly known as Twitter. The acquisition is expected to enhance xAI’s capabilities, particularly in training its chatbot, Grok, by leveraging X’s data and distribution network.

Musk, who also leads Tesla and SpaceX, emphasized the deep integration between xAI and X, stating in a post that the two companies' futures are closely linked. He confirmed that the deal values xAI at $80 billion while placing X’s worth at $33 billion, factoring in its $45 billion valuation minus $12 billion in debt. However, details of how X’s leadership will be incorporated into xAI remain unclear, as does the extent of potential regulatory scrutiny.

Saudi investor Prince Alwaleed bin Talal, whose company Kingdom Holding is a major stakeholder in both X and xAI, expressed strong support for the deal, estimating that his investments in both companies could now be worth between $4 billion and $5 billion. Analysts have noted that the pricing of X at $45 billion, including its debt, was not coincidental, as it exceeds Musk’s original $44 billion acquisition price for Twitter in 2022 by $1 billion.

Investors in xAI were not consulted before the deal was finalized, but sources indicate that they were informed that the acquisition would lead to greater synergy between X and xAI, particularly in advancing Grok’s AI development. The deal further strengthens Musk’s control over his various ventures, consolidating their resources and technological infrastructure.

The acquisition comes amid intensifying competition in the AI space, where xAI is emerging as a major challenger to OpenAI, Microsoft, and Chinese startup DeepSeek. Launched less than two years ago, xAI recently raised $10 billion in funding, bringing its valuation to $75 billion. In February, Musk made a $97.4 billion bid for OpenAI, which was rejected. He has also sued OpenAI to prevent its transformation from a nonprofit to a for-profit entity, though a judge recently denied his request for an injunction.

As part of its expansion efforts, xAI has been rapidly increasing its computing capabilities, with its Memphis-based supercomputer, "Colossus," touted as the world’s most powerful AI training cluster. The company also introduced its latest AI model, Grok-3, in February. Through the acquisition of X, xAI gains access to vast amounts of real-time user-generated content, which could further enhance its AI development and product distribution. Following Musk’s takeover of Twitter, the platform underwent major restructuring, including workforce reductions that initially led to an exodus of advertisers. However, many brands have begun returning as Musk’s influence in U.S. politics grows.

The financial landscape of the deal has also been shaped by investor interest in AI. The $13 billion debt Musk used to acquire Twitter was held by several banks for two years before they were able to offload it last month. Analysts suggest that X’s improved financial performance and the surging demand for AI investments made this possible. Investors who acquired the debt are expected to benefit significantly, as its value has likely appreciated. In a separate legal development, Musk recently faced a setback when a U.S. judge rejected his attempt to dismiss a lawsuit accusing him of misleading former Twitter shareholders by delaying the disclosure of his initial investment in the company.

Disclaimer: This image is taken from Reuters.