xAI Acquires Hotshot, Bolstering X’s AI Ambitions
Elon Musk’s artificial intelligence startup, xAI, has made its first acquisition, purchasing the video generation project, Hotshot. Hotshot, known for its text-to-video and text-to-GIF AI models, will now integrate its technology into xAI’s operations, potentially enabling X users to generate video clips directly within the platform, though initially, this feature may be available only to those with a paid X subscription.
Hotshot took to the X platform to announce the news: “Over the past 2 years we’ve trained 3 video foundation models – Hotshot-XL, Hotshot Act One, and Hotshot. We see these video models as an early look into the future of learning, entertainment, communication and more. We’re excited to continue scaling these efforts on the largest cluster in the world, Colossus, as a part of xAI.”
xAI’s “Colossus” supercomputer cluster, located in Memphis, was constructed in a mere 122 days and houses 200,000 Nvidia H100 GPUs. This resource boost positions the Hotshot team to accelerate its text-to-video capabilities, which are slated to be integrated into X’s Grok chatbot in the near future.
In response to the acquisition news, X Corp chief Elon Musk simply noted: “Cool video AI coming soon!” — Elon Musk (@elonmusk) March 17, 2025
This acquisition marks xAI’s initial strategic move since securing over $12 billion in funding from various sources over the past two years. While xAI operates independently from the social media platform X, both entities fall under the “X Corp” business umbrella. The two are interconnected: X posts fuel xAI projects, and xAI’s Grok chatbot is integrated into the X app.
This interconnectedness could, theoretically, enable Musk to allocate funds between xAI and X. The broader goal is for xAI to become a separate entity providing real-time insights derived from X, establishing a more valuable AI tool for active engagement and trend analysis.
While the use of X’s Grok chatbot is still somewhat limited, the introduction of video creation capabilities could significantly boost its adoption and position it as a more formidable competitor against AI projects developed by OpenAI and Meta. Musk has, at times, taken aim at the AI projects of OpenAI, for what the executive has stated is for personal reasons. xAI could serve as a countermeasure against censorship within existing AI tools as well, with Musk and his associates having previously criticized competitor projects as “too woke.”
Regardless, this acquisition underscores the ongoing AI race, which could help bolster xAI’s standing. While xAI may struggle to keep pace with Meta, which has committed $65 billion to AI development this year alone, Musk enjoys a strategic advantage due to a potential AI overhaul within the U.S. government. This could lead to lucrative development contracts for xAI, although this presents a potential conflict of interest.
