xAI buys X (Patreon)

The acquisition of X (formerly Twitter) by xAI is a storyline that practically writes itself.

Earlier this week, I noted that X held a 25% stake in xAI, positioning X as a critical data source powering xAI’s ambitions. It’s a match made in heaven—or at least in Silicon Valley. And that xAI was drastically undervalued compared to OpenAI at $300BN!

Today, Elon Musk announced that xAI acquired X in an all-stock deal, valuing X at $33 billion (or $45 billion including $12 billion in debt) and xAI at $80 billion. This merger intertwines their futures, blending X’s vast data, reach, and distribution with xAI’s AI expertise.

Now, let’s break down the math for the original X investors. Musk bought Twitter in 2022 for $44 billion. Reports from late 2024 indicated that X investors were granted a 25% stake in xAI, which, at the time, was valued at $50 billion in a fundraising round—implying a $12.5 billion stake for X investors. Fast forward to this acquisition: xAI’s valuation has risen to $80 billion, making that 25% stake worth $20 billion today.