Elon Musk’s AI company xAI has acquired generative AI startup Hotshot, which specializes in text-to-video and text-to-GIF models. This is xAI’s first acquisition, announced on March 14, as it aims to strengthen its video generation capabilities.
Founded in 2017, by Aakash Sastry and John Mullan, Hotshot was originally 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. The integration of Hotshot into xAI would give the startup the ability to scale its work using xAI’s powerful Colossus computing cluster, which hosts 200,000 Nvidia H100 GPUs.
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“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,” Sastry said about the acquisition in a LinkedIn post. Meanwhile, Musk said “ Cool video AI coming soon!” via an X post.
San Francisco-based 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.
It is not yet known if all members of Hotshot team would join xAI following the acquisition. Sastry expressed gratitude toward his co-founder Mullan and other stakeholders for their contributions.
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This acquisition might indicate xAI’s plans to build its own video generation models to compete with the likes of Sora, Google’s Veo 2, and others. Musk has previously hinted that xAI is developing video-generating models to add to its Grok chatbot platform. He mentioned, during a livestream in January that he expects a “Grok Video” model to be released “in a few months.”
In December 2024, xAI raised $6 billion in a Series C funding round, bringing its total recent funding to $17 billion. In March, xAI joined the AI Infrastructure Partnership (AIP), a consortium backed by Microsoft and BlackRock, aiming to invest over $30 billion into AI infrastructure projects. This collaboration focuses on developing data centers and energy facilities required by AI applications.