The xAI–X merger is a good deal — if you’re betting on Musk’s empire

Summary

When Elon Musk announced that his AI startup, xAI, had acquired his social media company, X (formerly known as Twitter), in an all-stock deal, it raised some eyebrows. But in many ways, the deal made sense. xAI’s chatbot, Grok, was already deeply integrated with X, X was floundering financially, and Musk needed a way to make his $44 billion Twitter acquisition look less like an impulsive takeover and more like a strategic play for AGI dominance. It also pointed to something deeper about how Musk’s empire works: investing in any one of his companies isn’t about a quick return on investment. It’s about buying into the mysticism around Musk and swallowing whole a narrative of success that outpaces the actual numbers. Some call it a grift, pointing to Musk’s history of overpromising and underdelivering. But the market is increasingly more tolerant – welcoming, even – of narrative-led investments, particularly when the thread that ties the tale together is one of the president’s right-hand men. “All of Elon’s companies today are basically one company,” Yoni Rechtman, a principal at Slow Ventures, told TechCrunch. “It’s all already Elon, Inc. There are people who work across multiple companies simultaneously. They share a web of capital connections. They do business with one another, and he treats them all effectively as one company. So [the xAI-X merger] just ends some of the fiction that the two businesses were separate.” The thinking among Musk bulls like Ron Baron, the founder of investment management firm Baron Capital, is that “every single thing [Musk] does is helping everything else he does,” as Baron phrased it. Other businesses under Musk’s control include Tesla, SpaceX, The Boring Company, and Neuralink – some of which reportedly share resources. “When [Musk] bought Twitter, did he have in his mind that there’s an opportunity to have this data, a tremendous value for licensing? When he decided he wanted to go to Mars with SpaceX, did he really think initially t...