Can xAI Save X? Musk’s New Merger And Its Financial Implications

Elon Musk announced that xAI, his artificial intelligence company, acquired X through an all-stock transaction.

Musk announced on Friday where he valued xAI at $80 billion, and X at $33 billion but included the $12 billion debt of the social network to reach a total value of $45 billion.

@xAI has acquired @X in an all-stock transaction. The combination values xAI at $80 billion and X at $33 billion ($45B less $12B debt).

Since its founding two years ago, xAI has rapidly become one of the leading AI labs in the world, building models and data centers at…

— Elon Musk (@elonmusk) March 28, 2025

According to Musk the future of X and xAI exists as one entity because the companies share essential assets. These include data, models, computing power, distribution channels, as well as talent base.

This move follows a pattern in Musk’s  business strategy. In 2016 Tesla acquired SolarCity through a business transaction that he managed as the  biggest shareholder of the solar energy company, as noted by The New York Times.

The Time reports that Tesla functions as a publicly traded entity, yet Musk operates his companies, including SpaceX, Neuralink, and The Boring Company, under private ownership, which enables him to redirect funding without public monitoring.

Reuters argues that X has faced financial challenges since Elon Musk purchased the company for $44 billion in 2022.

The advertising revenue-based business experienced decreased brand sponsorships due to Musk’s relaxed content moderation policies, and subsequent controversial platform decisions, as noted by The Times.

Fidelity demonstrated its commitment to the company by valuing X at  $12 billion during December 2024. The financial performance of X remains unpredictable despite some advertisers deciding  to return to the platform, noted The Times.

Musk revealed to employees in January that X operated at a financial loss, which barely compensated its expenses. Additionally, X’s internal financial reports from March showed that the company failed to reach its $153 million advertising target as ad sales dropped to $91 million, as reported by The Times.

In contrast, The Times notes that xAI continues to demonstrate positive growth patterns in the market. The company received $6 billion in funding during December which caused its worth  to reach $40 billion.

Through the combination of these companies Musk utilizes xAI’s expanding value to address X’s monetary challenges.