Musk’s xAI start-up swallows up X social network in surprise deal

NEW YORK – Elon Musk said his xAI artificial intelligence start-up has acquired the X platform, which he also controls,

at a valuation of US$33 billion (S$44.3 billion),

marking a surprise twist for the social network formerly known as Twitter. 

“The combination values xAI at US$80 billion and X at US$33 billion,” the billionaire wrote on March 28 in a post on X. The value of X is US$45 billion when including US$12 billion of debt, he said, describing the purchase as an all-stock transaction.

The deal gives the new combined entity, called XAI Holdings, a value of more than US$100 billion, not including the debt, according to a person familiar with the arrangement, who asked not to be identified because the terms were not public. Morgan Stanley was the sole banker on the deal, representing both sides, other sources said. 

For Mr Musk, the deal streamlines his businesses and solidifies the relationship between the former Twitter and xAI, which has used information from the social network to hone its chatbot. The deal also offers a resolution to X’s other backers following months of uncertainty over the state of their investment as Mr Musk’s changes led to an exodus of users and advertisers.

“XAI and X’s futures are intertwined,” MrMusk posted. “Today, we officially take the step to combine the data, models, compute, distribution and talent. This combination will unlock immense potential by blending xAI’s advanced AI capability and expertise with X’s massive reach.”

Mr Musk, the world’s richest person,

acquired Twitter for US$44 billion in late 2022,

a transaction that included debt. After taking control of the platform, he quickly moved to cut costs by slashing thousands of jobs, closing offices and renegotiating contracts. He also tried to make Twitter more aligned with what he calls “free speech absolutism” by eliminating certain content restrictions and allowing some banned accounts to return.

But Mr Musk also eroded a significant portion of the network’s advertising business in the process. Marketers fled the site for fear that their promoted posts would appear alongside unsavory content from users. Even with an expected boost in sales for 2025, X’s advertising business is still projected to be roughly half of what it was when Musk acquired the company. 

Over the past year, Mr Musk has used the service to promote Grok,

a chatbot developed by xAI

that was trained, in part, with posts from X users. The start-up is competing with AI companies such as OpenAI, which Mr Musk co-founded before an acrimonious split.

A spokesperson for X declined to comment, pointing Bloomberg to a post from X chief executive Linda Yaccarino. “The future could not be brighter,” she wrote. It is unclear whether this merger will affect her role as X’s CEO. 

Mr Musk has a long history of blending his various operations by sharing investors, technology and employees. His AI business, in addition to training on X user data, has shared office space with X in the San Francisco Bay Area. X amassed a US$6 billion stake in xAI as of January, which further intertwined the businesses. 

Investors in xAI have included Sequoia Capital, Andreessen Horowitz, Fidelity Investments and BlackRock. Some of the AI start-up’s investors were also backers of X, including Andreessen Horowitz and Sequoia. 

For most of Mr Musk’s tenure as X’s owner, the social networking company was believed to be valued well below the US$44 billion that he paid in late 2022. Fidelity, for example, had marked down its equity stake in the company by more than 70 per cent as recently as November 2024. 

But X has seen a slight business resurgence since Mr Musk became a top adviser to US President Donald Trump, a relationship that has brought some advertisers back in an effort to curry favour with the two men. X raised close to US$1 billion in new equity from investors, Bloomberg reported in March 2025, in a deal that gave the company a valuation in line with when Mr Musk took it private in 2022. 

Banks that had also been holding on to debt from Mr Musk’s Twitter purchase were also finally able to offload it earlier in 2025 without taking a loss. At one point in 2022, that debt was marked at 60 US cents on the dollar by some firms.

X is on pace for its first year of advertising revenue growth since the Musk takeover, though some of those marketers are believed to be returning out of fear that Mr Musk may sue them. The company is projected to generate US$1.31 billion in US advertising sales in 2025, an increase of 17.5 per cent, according to research firm Emarketer. Globally, X’s ad sales are estimated to be US$2.26 billion in 2025, up 16.5 per cent. BLOOMBERG