Musk sells X to his own firm xAI as part of a $33 billion AI consolidation deal

Elon Musk’s artificial intelligence company, xAI, has acquired his social media platform X — formerly known as Twitter — in an all-stock deal valued at $33 billion. The move marks a new phase in Musk’s fast-paced consolidation of his tech empire, combining two of his high-profile companies to advance AI efforts, including the training of Grok, xAI’s chatbot rival to OpenAI’s ChatGPT.

Announcing the deal on X, Musk wrote: “The combination values xAI at $80 billion and X at $33 billion ($45B less $12B debt).” He added, “xAI and X’s futures are intertwined. Today, we officially take the step to combine the data, models, compute, distribution and talent.”

While the transaction aligns Musk's AI and social media operations, several details remain unclear — including investor compensation, the fate of X’s leadership, and potential regulatory hurdles.

Analysts were taken aback by the move. “This development feels surprising and somewhat unexpected,” said PP Foresight analyst Paolo Pescatore. “To a certain extent, it closes a chapter in the turbulent saga of X.”

According to Gil Luria of D.A. Davidson & Co., “The choice of $45 billion is not a coincidence. It is $1 billion higher than the take-private transaction for Twitter in 2022.”

Musk, who previously acquired Twitter for $44 billion in 2022 and declared “the bird is freed,” has dramatically reshaped the platform, slashing its workforce and seeing advertisers flee — though many have since returned. The debt taken on during the 2022 buyout was finally offloaded last month by the seven banks that held it, capitalizing on growing investor interest in AI and X’s improved financials.

An investor in xAI, speaking anonymously to Reuters, said the deal didn’t come as a surprise and viewed it as part of Musk’s continued tightening of control over his ventures. Musk reportedly did not seek investor approval but highlighted that xAI and X had been working closely and would deepen integration around Grok.

The acquisition also comes amid Musk’s legal battles with OpenAI, a company he co-founded but now competes with. After his failed $97.4 billion bid to acquire OpenAI, Musk launched Grok-3 in February and continues to expand xAI’s capabilities, including through its Memphis-based “Colossus” supercomputing cluster — said to be the largest in the world.

Meanwhile, a U.S. judge recently rejected Musk’s attempt to dismiss a lawsuit accusing him of delaying disclosure of his Twitter stake, adding a new wrinkle to his already complex legal and business portfolio.

(With Reuters inputs)