When Elon Musk announced that his AI startup, xAI, had acquired his social media platform, X (formerly Twitter), in an all-stock deal, people had questions. But when you look closely, the move wasn’t all that surprising.
Grok, the chatbot created by xAI, was already a major feature on X. Meanwhile, X was losing money fast. And Musk? He needed a way to make his $44 billion Twitter purchase look less like a rash decision and more like part of a grand plan to dominate AI.
This deal also revealed something deeper about how Musk runs his empire: if you’re investing in any of his companies, you’re not just betting on a product. You’re buying into Musk himself—and the larger-than-life story he tells about where the world is going.
Is It Vision or Just Hype?
Some critics say Musk has a history of overpromising and underdelivering. But despite the skepticism, investors seem more interested in his vision than his balance sheets. They’re willing to invest based on potential, not performance. And when that potential comes with Musk’s name on it, they jump in.
Yoni Rechtman, a principal at Slow Ventures, puts it this way: “All of Elon’s companies are already one big company. People work across them. They share money. They do business with each other. He runs them like they’re all part of the same machine.” So, merging xAI with X just made official what was already happening behind the scenes.
The “Elon Ecosystem” Effect
Investors like Ron Baron, who runs Baron Capital and has heavily backed Musk, believe everything Musk does feeds into everything else he does. Tesla, SpaceX, Neuralink, The Boring Company—they all share resources, data, and long-term goals.
Baron believes Musk doesn’t make moves randomly. When Musk bought Twitter, it wasn’t just about social media. It was about the data, and how that data could power AI. When he built SpaceX, it wasn’t just to go to Mars—it was also to build a satellite network. And Tesla? That’s not just an EV company. It’s a stepping stone toward autonomous vehicles and even AI-driven robots.
It all connects. It’s the “Elon ecosystem,” and investors like Baron love that interconnectedness.
Big Valuations, Bigger Bets
So back to the xAI-X deal. Critics questioned how X could be worth $33 billion when just a few months earlier, it was worth far less. They also raised eyebrows at xAI being valued at $80 billion—despite having little revenue.
But that’s how investing in Musk works. Valuations aren’t just about what a company is today—they’re about what it could be. Tesla is the perfect example: it’s valued like a high-growth tech company, even though it makes cars with relatively standard profit margins. Why? Because investors are betting Tesla will unlock massive profits with self-driving tech and robotics.
Gene Munster, a managing partner at Deepwater Asset Management, explained: “Elon keeps people invested in the long game. That’s his superpower.”
Munster’s firm backs X, xAI, and Tesla. He’s all in.
But High Rewards Come with High Risk
Of course, betting on Musk means taking on some real risks too.
Dan Wang, a business professor at Columbia, points out that X is currently being sued by the SEC. The accusation? Musk may have misled investors by waiting too long to disclose how many Twitter shares he had purchased, which could’ve let him buy in at a lower price.
There are other risks too: privacy concerns about how X is quietly using user data to train AI, and the lack of clear regulation around AI. European regulators are already investigating whether Musk’s data practices break GDPR laws.
And then there’s Musk’s attention span. Yoni Rechtman notes that many Tesla investors feel like Musk has been distracted lately, more focused on politics than on his companies.
Some Investors Shrug Off the Concerns
Despite the noise, people like Munster aren’t worried. He believes xAI’s potential outweighs the risks. “We’re betting that AI will be more transformative than people think,” he said. “What’s the value of owning one of the few brains the world will run on?”
Rechtman says it’s not about blind faith in Musk—it’s about trusting that he knows how to bend markets to make things happen that no one else could. Investors who buy into his companies are “going long on Elon,” he says. “They’ll keep believing in the story.”
Being “All-In” Might Be the Only Way In
There’s also a strategic angle here. If you want access to some of Musk’s biggest ventures—like SpaceX, which may never go public—you need to be in his inner circle. That means supporting his more speculative ventures, like X or xAI, might get you access to deals that others can’t touch.
As Rechtman put it: “SpaceX is a real company, but it’ll never go public. The only way to invest is to be in Elon’s good graces.”
Final Thoughts
At the end of the day, the xAI-X deal is just another chapter in the Musk saga. It’s part business strategy, part PR move, and part sci-fi vision. For investors who believe in the Elon ecosystem, it’s all part of the plan. For skeptics, it’s another example of style over substance.
Either way, the message is clear: Musk doesn’t just sell products—he sells belief. And right now, plenty of people are still buying.