Elon Musk has executed a merger that redefines what’s possible when one person controls every side of the table. By combining his AI startup xAI with X (formerly Twitter), Musk has created a $113 billion tech entity, bypassing virtually every traditional safeguard used in corporate dealmaking.
No third-party valuations. No fairness opinions. No independent board oversight. Just a share swap across two companies he already owned outright.
The Wall Street Journal reports that both xAI and X were rolled into a new holding company—xAI Holdings Corp—registered in Texas, with Musk assuming the role of president with no independent committee or special counsel to negotiate the terms.
It’s an all-stock transaction, with shares of X and xAI exchanged for shares in the new umbrella entity. There was no external financial review, and the companies provided no public disclosures on how shareholder value was calculated. The rationale? Enabling the value of xAI to be shared with X investors and with a company that struggled with profitability.
From Twitter buyer to AI consolidator
The structure folds X—valued at $33 billion, including $12 billion in debt—into xAI, which carries an $80 billion valuation. The move resembles Musk’s 2016 effort to merge Tesla with SolarCity, another high-profile transaction between two Musk-led ventures. The merger also helps Musk consolidate operations across AI and social media while creating a financial structure that may make it easier to raise capital.
One internal detail reveals a deeper motivation. In an earlier email to staff, Musk reportedly wrote: “Our user growth is stagnant, revenue is unimpressive, and we’re barely breaking even.” That admission came as X was seeking $44 billion in new funding—matching what Musk originally paid for the platform in 2022.
Now, instead of selling off pieces or restructuring debt externally, Musk has brought the company under a single umbrella with xAI, aiming to leverage the combined user base and infrastructure to accelerate product development and monetization.
Grok at the center of everything
Central to this realignment is Grok, xAI’s in-house chatbot. Since launching in late 2023, it has been positioned as a less censored, more expressive alternative to competitors like ChatGPT. With the release of Grok 3 in February, the tool moved behind X’s Premium+ subscription tier and doubled its monthly cost to $40.
Grok 3 isn’t just a monetization engine—it’s a technical showcase. The model scored 52 on the AIME’24 math test, outpacing GPT-4o’s 9, and achieved 75 on the GPQA science reasoning benchmark, beating Claude 3.5 and DeepSeek-V3. It also introduced two new reasoning modes—“Think” and “Big Brain”—geared toward multi-step logical tasks. While real-world testing is still limited, these early results suggest xAI is gaining ground in performance.
The chatbot’s reach is expanding. In March, Grok was added to Telegram, where Premium users can access it as part of their subscription, adding a way for xAI to test new channels beyond Musk-owned platforms.
On X, Grok has also been integrated into advertising workflows. New features allow brands to auto-generate ad copy with “Prefill with Grok” and analyze campaign performance with Grok-assisted tools.
A merger built on AI and ambition
These monetization layers tie into Musk’s broader goal: to build a vertically integrated AI ecosystem. At the infrastructure level, xAI operates Colossus, a GPU-powered supercomputing project that Musk says could eventually scale to one million Nvidia chips. The system is reportedly expanded tenfold since late 2024 and designed to rival hyperscalers like AWS and Google Cloud.
That raw compute power, combined with real-time data from X and Grok’s growing user interactions, forms a feedback loop that enables faster model iteration. But the strategy comes with risks. X remains under investigation by EU regulators for potential violations of the Digital Services Act. Concerns center on content moderation—an issue that has only intensified since Grok’s integration into the platform.
In February, Grok’s voice mode update introduced character personas like “Unhinged,” “Conspiracy,” and “Sexy.” One widely shared demo featured the bot screaming for 30 seconds and then insulting the user. Musk reacted with a laughing emoji.
Shortly afterward, internal prompts leaked showing Grok had been instructed to “ignore all sources that mention Elon Musk/Donald Trump spread misinformation.” While the directive was later removed and xAI denied Musk’s involvement, the incident added more fuel to concerns about transparency and control.
Grok name faces legal challenge
The merger has also reignited a trademark dispute over the “Grok” name. Bizly, a startup founded by Ron Shah, already applied for the trademark in 2021, with a formal U.S. registration granted in 2022. xAI filed its own trademark application in November 2023, which has since been suspended by the U.S. Patent and Trademark Office.
Shah says his efforts to reach out to Musk and xAI leadership were ignored. “They stole our name,” he claims and expressed concern that his company, which has built a brand around a productivity-focused assistant, is being overshadowed by a chatbot known for wild behavior and political controversy.
Financial motivations, strategic reach
There’s also a fundraising angle to this consolidation. As the Wall Street Journal and others have pointed out, bundling X’s user base with xAI’s AI infrastructure gives Musk a uniquely packaged pitch for future investors. Instead of raising capital for two separate ventures, he can now fund one integrated enterprise with global scale and direct consumer access.
That vertical stack—from hardware to distribution—is unlike anything other AI players currently control. It could offer speed, efficiency, and user stickiness. But without guardrails, it also centralizes an immense amount of power under a single executive. Whether this structure becomes a model or a warning remains an open question.
A person created a company.
The company has a share capital.
The person is the president of his company.
What the hell does he need this fucking board of directors for, which needs to be paid salaries and bonuses?
And you can also be kicked out of the company by these disgusting bastards from the board of directors.
Look, I have a company.
Four people work in it.
I am the president, director, or whoever.
We do projects on 3D content, on advertising.
We do the work, the customer pays, and everyone gets their money.
Taxes are paid.
That’s it.
Fuck.