Though founded by Tesla CEO Elon Musk with media-shaking X Corp, xAI continues to make waves by recently purchasing the one-time Twitter, itself now called X. The agreement extends to a mind-boggling $33 billion. This strategic move increases xAI’s valuation to $80 billion. In that sense, it’s a major move in the long-running race with big AI players such as DeepSeek and OpenAI. The acquisition comes just shy of two years after the launch of xAI. It’s poised to allow a closer integration with xAI’s latest chatbot, Grok-3.
It’s been difficult to overstate xAI’s meteoric rise through the tech industry, marked by its recent fundraising triumph. The company’s funding round of $10 billion valued the company at an impressive $75 billion. This capital injection has allowed xAI to improve its data center capacity and create more advanced AI models. Colossus is at the center of these efforts. This massive cluster of supercomputers, located in Memphis, Tennessee, is the largest of its kind anywhere in the world.
xAI’s takeover of X is a key moment in that process. Such a shift would greatly benefit Elon Musk in training his AI model, Grok. The integration of the social media platform with xAI will allow for shared access to data, models, compute resources, distribution channels, and talent. This synergy is expected to strengthen xAI’s competitive edge against its rivals.
“To a certain extent, it closes a chapter in the turbulent saga of X.” – PP Foresight analyst Paolo Pescatore
The $33 billion price tag for X assumes a $45 billion valuation less $12 billion in debt. Analysts have called this number hugely important within the context of the acquisition.
“The choice of $45bn is not a coincidence.” – DA Davidson & Co analyst Gil Luria
From the start, xAI has been in head-to-head competition with more established AI companies such as OpenAI. The firm has previously made important legal actions against OpenAI. They are challenging the company’s conversion from a non-profit to a for-profit in federal court in California. This legal fight gives further insight into the intense competition between the two companies. Now they’re battling for supremacy in the fast-developing AI space.
Beyond its courtroom antics, xAI’s acquisition spree serves as a case study in the company’s all-out approach to gaining a competitive advantage. By purchasing X, xAI obtains access to a huge user base. This acquisition further gives them access to valuable data that should only improve their AI capabilities. This bold move sets xAI up to undoubtedly leapfrog their competition, including companies such as DeepSeek and OpenAI.
The release of Grok-3 in February was yet another step for xAI in its goal to stay at the forefront of AI development. This latest iteration of its chatbot signifies the company’s commitment to developing cutting-edge technology that can rival offerings from other AI giants.
“This development feels surprising and somewhat unexpected.” – PP Foresight analyst Paolo Pescatore