Elon Musk’s artificial intelligence venture, xAI, has acquired the social media platform X, formerly known as Twitter, in an all-stock transaction. The deal values xAI at $80 billion and X at $33 billion, inclusive of $12 billion in debt. Musk announced the acquisition on X, stating, “xAI has acquired X in an all-stock transaction.”
This strategic move aims to integrate xAI’s advanced artificial intelligence capabilities with X’s extensive user base and data resources. By combining the data, models, compute power, distribution channels, and talent from both companies, the merger seeks to create enhanced, intelligent user experiences and accelerate human progress.
The acquisition has been met with a mix of optimism and skepticism within the industry. Investors such as Prince Alwaleed bin Talal, who hold significant stakes in both companies, have welcomed the merger, viewing it as a step towards innovation in the AI and social media sectors. Conversely, former Twitter executive Bruce Daisley has expressed concerns, suggesting that the deal may indicate an overinflated AI market.
The merger also has implications for the advertising landscape on X. In recent times, major brands have cautiously allocated advertising budgets to X to maintain a presence on the platform without appearing to boycott it. This approach aims to avoid potential backlash from Musk, who has previously taken legal action against former advertisers. Despite a decline in U.S. ad spending on X, some large advertising agencies have entered agreements to set annual spending targets. The platform has also seen an increase in new advertisers, supported by the introduction of AI tools and self-service options.
Since acquiring Twitter in 2022 for $44 billion and rebranding it as X, Musk has implemented significant changes, including workforce restructuring and feature modifications. These actions have led to nearly $1 billion in new equity and projected growth in advertising revenues. The integration of xAI’s technologies, such as the chatbot Grok, is expected to provide X with a competitive edge in the AI sector.
