Elon Musk is merging his AI company xAI with social platform X in a $33 billion deal announced for March 2025. The self-transaction combines xAI’s Grok chatbot technology with X’s 600 million users and real-time data. Currently valued at $75 billion, xAI recently raised $10 billion in funding. This move intensifies competition with OpenAI and other AI companies. Musk’s strategy reflects his vision of creating an AI-powered social media ecosystem.
X, formerly known as Twitter, was purchased by Musk for $44 billion in 2022. The platform boasts over 600 million active users and has been described as a digital town square. Under Musk’s leadership, X has evolved into what he calls an efficient company positioned for scalable growth.
From social media giant to Musk’s vision of an optimized growth engine, X now claims 600 million voices in its digital forum.
The acquiring company, xAI, was founded by Musk in March 2023. It recently raised $10 billion in funding at a $75 billion valuation before this acquisition. The company’s flagship product is the Grok AI chatbot, which competes with OpenAI’s ChatGPT, Google’s Gemini, and Anthropic’s Claude.
The strategic rationale behind the merger centers on blending xAI’s artificial intelligence capabilities with X’s massive user reach. The combined entity aims to deliver smarter experiences while utilizing X’s real-time data feed for AI training. The current deal values X at only $33 billion, significantly less than what Musk paid to acquire it. The announcement of this acquisition was made by Musk on March 28, 2025.
xAI recently launched its Grok-3 chatbot in February 2025. The company operates the “Colossus” supercomputer cluster in Memphis, Tennessee, which Musk claims is the world’s largest. This setup provides 10 times the computational resources of the previous Grok version. This investment aligns with the broader trend of AI market growth, which is increasing at an annual rate of 36.6% through 2030.
The deal intensifies competition in the AI sector, particularly with OpenAI, where Musk has a contentious history with CEO Sam Altman. Musk previously attempted to block OpenAI’s shift to a for-profit model.
X’s advertising revenue is expected to grow in 2025, though some advertisers reportedly fear potential retaliation if they don’t spend on the platform. Musk currently serves as a major financial backer of President Trump and heads the Department of Government Efficiency, which is focused on reducing government employee numbers.
