Elon Musk recently announced that his AI company, xAI, has acquired X, the social media platform he bought in 2022. The sale, which includes $12 billion in debt, is worth $45 billion, marginally more than Musk’s initial purchase price.
Posting on X, Musk noted that combining xAI’s capabilities with X’s vast user base would create new opportunities.
While no imminent improvements to X were announced, xAI’s AI chatbot, Grok, is already integrated into the platform. Musk suggested that the merger would lead to more intelligent and engaging user experiences. The combined entity, he estimated, is now worth around $80 billion.
Since taking over X, formerly Twitter, Musk has implemented sweeping changes, including altering X’s verification system, cutting 80% of the workforce, and reinstating controversial accounts. These moves caused several major advertisers to withdraw.
Despite this, X’s valuation has seen a rebound. In late 2024, Fidelity estimated that X’s value had dropped nearly 80% from Musk’s purchase price, but it later regained some ground, reaching about 30% of the original valuation.
Musk’s growing presence in the AI sector has been a major focus, aligning with broader industry and political trends. He intensified his long-standing rivalry with Sam Altman, OpenAI CEO, earlier this year when he joined a group of investors in a bid to purchase OpenAI for about $100 billion.
The integration of X and xAI could provide Musk with a streamlined approach to deploying AI advancements to a vast audience. Major advertisers that had distanced themselves from X due to concerns over hate speech and controversial content have started returning.
Apple and Amazon have reportedly resumed ad campaigns on the platform. The improved financial stability has also benefited bondholders, who recently sold X’s debt holdings at near-face value, albeit with high interest rates.
In February, Bloomberg reported that the platform was in discussions to secure funding at a valuation of $44 billion. The outcome of those negotiations remains unclear, but Musk confirmed that X’s current debt load stands at $12 billion.
X’s recovery has been fueled in part by its stake in xAI, which was reportedly seeking a $75 billion valuation in a recent funding round. Another key factor in X’s resurgence is Musk’s evolving political role. His appointment to a government position under the Trump administration has given him increased influence over federal operations.
X has also become a hub for political discourse, especially in relation to Trump’s administration, with Musk using the platform to amplify his views and policy changes.
If this divestiture is a harbinger of the expected consolidation within the AI space, entities like D-Wave Quantum Inc. (NYSE: QBTS) will be watching to see what similar activity emerges as the race for dominance in the AI space heats up.
NOTE TO INVESTORS: The latest news and updates relating to D-Wave Quantum Inc. (NYSE: QBTS) are available in the company’s newsroom at https://ibn.fm/QBTS
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