Elon Musk's AI company, xAI, has acquired Hotshot, a startup specializing in AI-powered video generation tools, to bolster its video creation capabilities.

This acquisition aligns with xAI's goal of expanding its Grok chatbot platform and may set new industry standards for AI-generated video content.

With this move, xAI positions itself to compete against major players such as OpenAI's Sora and Google's Veo 2.

Following the acquisition, Hotshot announced it would cease new video creation as of mid-March 2025, allowing existing users until the end of the month to download their content.

While the financial terms of the deal remain undisclosed, Hotshot will utilize xAI's Colossus supercomputer, which boasts 200,000 NVIDIA H100 GPUs, to scale its operations.

Founded by Aakash Sastry and John Mullan, Hotshot has developed three text-to-video foundation models: Hotshot-XL, Hotshot Act One, and Hotshot, capable of creating professional-grade videos from text prompts.

Although xAI and the social media platform X operate separately, they are interconnected, with posts from X contributing to xAI's projects.

Musk has expressed enthusiasm over the acquisition, which follows xAI's successful fundraising of over $12 billion in the past two years.

This acquisition could revolutionize corporate communications, educational tutorials, and marketing strategies by simplifying video production processes.

The integration of Hotshot's technology enhances xAI's market presence, directly positioning it against competitors like OpenAI and Google's AI video tools.

Hotshot's team will leverage the capabilities of xAI's Colossus supercomputer to enhance their video generation technologies.

Additionally, xAI stands to benefit from potential AI-related government contracts due to Musk's influence, despite the inherent conflict of interest.