Adapted by:
Javier Pastor
Senior WriterComputer scientist turned tech journalist. I've written about almost everything related to technology, but I specialize in hardware, operating systems and cryptocurrencies. I like writing about tech so much that I do it both for Xataka and Incognitosis, my personal blog.
Karen Alfaro
WriterCommunications professional with a decade of experience as a copywriter, proofreader, and editor. As a travel and science journalist, I've collaborated with several print and digital outlets around the world. I'm passionate about culture, music, food, history, and innovative technologies.
Last Friday, unexpected news made headlines. Tesla CEO Elon Musk’s startup xAI acquired X, also owned by Musk. The billionaire announced the deal, saying it gave xAI an estimated valuation of $80 billion, while X’s valuation was $33 billion ($45 billion minus $12 billion in debt). The key question is why this move happened and what to expect next.
Why it matters. According to Musk, the futures of xAI and X are intertwined, and this merger allows for combining “the data, models, compute, distribution and talent” of both companies. It also enables X’s accounts to integrate with xAI, giving it greater economic potential. X is recovering but has struggled since Musk bought it.
A natural merger. According to The New York Times, both companies are privately held and already share many resources, including engineers. Grok, xAI’s chatbot, uses publicly available data from X. Andrew Verstein, a professor at the UCLA School of Law, told The Times that Musk seems to be signaling: “I have a company—maybe not bankrupt, just not my crown jewel. I will buy it in a way that makes it look like a success using one of my other companies.”
Shares change hands. According to The Wall Street Journal, a holding company called xAI Holdings Corp. will replace X and xAI shares with new ones. Analysts say another potential benefit of this merger is that the combined company will find it easier to raise new rounds of investment.
It’s happened before. In 2016, Musk used Tesla stock to buy SolarCity, a renewable energy company where he was the largest shareholder and his cousin Lyndon Rive was CEO.
Many shared (and opaque) resources between Musk’s companies. The companies Musk founded and runs have always shared resources. Because they’re often private, some of these movements remain opaque. In August 2024, Tesla transferred employees to xAI and repurposed GPUs for X or xAI, all to accelerate Musk’s goal of making xAI a leader in AI development.
The Trump-Musk relationship facilitates everything. The months following Donald Trump’s new presidential term have benefited Musk. X’s valuation has increased, mainly due to the growing influence of the platform. Musk noted in the deal announcement that X has more than 600 million active users. xAI’s Grok demonstrated its integration with X by initially limiting access to paid X subscribers. However, Grok 3 has been available to all X users, including those on the free version, for months. xAI uses X activity to train its models, making the merger a natural progression.
What to expect. The acquisition shouldn’t significantly impact how the two companies operate for users. However, one thing is clear: resource-sharing, once opaque, will now be more comprehensive. xAI’s AI models will rely even more on data from X. In turn, X will benefit from improvements in models like Grok 3, available on the platform.
The super app is always on the horizon. The idea of an X super app has been discussed for a long time, and this merger brings that concept closer to reality. Content creation and social networking are already covered, but gaps remain—especially in enabling X as a payment platform, a feature Musk has mentioned more than once.
Image | Gage Skidmore
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