Elon Musk’s AI company has started a new debate with his decision to merge his AI-powered company with X and close the deal at $33 billion. The value of this deal will be shared equally between the co-investors of his company, formerly known as X. This deal is also considered to help train Twitter’s chatbot, called Grok, to make it more powerful and influential. Musk Said

“xAI and X futures are interlinked,”

He also played a pivotal role in the automaker Tesla and SpaceX. “Today, we officially combine the futures and features of both to compute data and the distribution of talent.”

He said the combined valuation peaked

“xAI at $80 billion and X at $33 Billion ( $45B less $12B debt) “

X representatives did not comment. Most of the deal specifications were vague and unclear, such as how X’s leader would integrate into the new firm or whether there would be any regulatory scrutiny. Musk is not only the wealthiest man but also a close ally of U.S President Donald Trump and also heads the Department of Government Efficiency. Prince Alwaleed bin Talal also made a move by requesting the development. He owns an investment company, Kingdom Holding, and is known as the best Saudi Arabian Investor. He noticed that his companies are the second-largest investors in the deal of X and xAI. He said

After this deal, the value of our investments is expected to reach between $4-$5 billion… and the meter is running,

Gil Luria, an analyst at D.A. Davidson said

the $45 billion price tag for X wasn’t a coincidence, especially when the debt is included. “ It is just $1 billion higher than Twitter’s take-private transaction in 2022.”

Another xAI investor said he was not surprised by the decision, viewing this deal as Musk consolidating his leadership and management at his own companies. Musk didn’t ask for approval from any of the investors. He just informed them that two companies had been collaborating closely, and the deal would be deeply linked to the integration with Grok, the investor said. 

Rivalry with OpenAI

A media report says that Musk’s xAI startup was introduced less than two years ago and recently raised $10 billion in a funding round that valued the company at $75 billion. It gives tough competition to Microsoft-backed OpenAI and the Chinese startup Deepseek. In February, Musk made a $97.4 billion bid with the consortium for OpenAI, which was later rejected, and he sued them to prevent ChatGpt from converting into a for-profit business from a non-profit site. A judge also denied Musk’s preliminary request that would prevent the changeover. As the competition becomes intense, xAI has been ramping up its data centre to increase its capacity and potential to train more advanced models. Its supercomputer clusters in Memphis, Tennessee, called “Colossus,” are touted as the biggest in the world. 

However, xAI launched the latest iteration of its chatbot in February, Grok-3. This X platform is expected to serve further as a distributor of xAI products. Meanwhile, it will also provide a real-time feed of users’ usage, screenshots, and other data. After purchasing Twitter, Musk gutted the company’s pillars (workforce), prompting advertisers to flee the platform and a rapid decline in revenue. Brands have returned to X recently as Musk’s influence has grown in the Trump administration. The seven banks extended Musk a loan of $13 billion to help him buy X. They kept the debt on their books for two years until they were capable of releasing it all at once last month, according to a source familiar with the transactions.