Musk’s xAI Acquires GenAI Startup Hotshot to Scale Text-to-Video Generation

xAI, the AI company founded by Elon Musk, has acquired Hotshot, a San Francisco-based generative AI video startup specialising in text-to-video and text-to-GIF models. It marks xAI’s first major acquisition as it seeks to strengthen video generation capabilities.

“​​Cool video AI coming soon!” said Musk in a post on X.

Hotshot, founded in 2017 by Aakash Sastry and John Mullan, initially focused on AI-powered photo editing tools before pivoting to video generation. 

The company has developed three foundational AI models—Hotshot-XL, Hotshot Act One, and Hotshot—that enable realistic video creation from text inputs. 

While the financial terms of the deal were not disclosed, the integration of Hotshot into xAI will allow the startup to scale its work using xAI’s powerful ‘Colossus’ computing cluster, which hosts 200,000 NVIDIA H100 GPUs.

Sastry expressed optimism about the acquisition, saying, “Over the past two years, we’ve built three video foundation models as a small team… We’re excited to continue scaling these efforts on the largest cluster in the world, Colossus, as a part of xAI.”

Hotshot has been backed by prominent investors, including Alexis Ohanian, Lachy Groom, and SV Angel. The startup has announced that it will begin shutting down operations, allowing existing users to download their videos until March 30.

While it remains unclear whether all members of Hotshot’s team will join xAI following the acquisition, Sastry expressed gratitude toward his co-founder Mullan and other stakeholders for their contributions.

The acquisition aligns with xAI’s broader ambitions to compete with major players like OpenAI and Google in generative AI. By incorporating Hotshot’s technology into its portfolio, xAI is expected to enhance its chatbot platform Grok with advanced video generation capabilities. 

This could enable X (formerly Twitter), also owned by Musk under X Corp, to offer users innovative features such as text-to-video creation.