Elon Musk’s AI company, xAI, acquires a generative AI video startup

Elon Musk’s AI company, xAI, has acquired Hotshot, a startup working on AI-powered video generation tools along the lines of OpenAI’s Sora.

Aakash Sastry, Hotshot’s CEO and co-founder, announced the news in a post on X on Monday.

“Over the past 2 years we’ve built 3 video foundation models as a small team — Hotshot-XL, Hotshot Act One, and Hotshot,” Sastry wrote. “Training these models has given us a look into how global education, entertainment, communication, and productivity are about to change in the coming years. We’re excited to continue scaling these efforts on the largest cluster in the world, Colossus, as a part of xAI!”

Hotshot, which is based in San Francisco, was founded several years ago by Sastry and John Mullan. The startup initially focused on developing AI-powered photo creation and editing tools, but eventually pivoted in favor of text-to-video AI models.

Some news – We’re excited to announce that @HotshotSupport has been acquired by @xAI 🚀

Over the past 2 years we’ve built 3 video foundation models as a small team – Hotshot-XL, Hotshot Act One, and Hotshot.

Training these models has given us a look into how global education,… pic.twitter.com/W4rmYUxnMR

— Aakash (@aakashsastry) March 17, 2025

Hotshot managed to attract investments from VCs including Lachy Groom, Reddit co-founder Alexis Ohanian, and SV Angel prior to its exit. The company never publicly disclosed the size of its funding rounds.

xAI’s acquisition of Hotshot could indicate that the former 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. During a live stream in January, Musk said that he expects a “Grok Video” model to be released “in a few months.”

Hotshot said on its site that it began sunsetting new video creation on March 14. Existing customers will have until March 30 to download videos they’ve created using the platform, the company added.

It wasn’t immediately clear whether the entire Hotshot staff would be joining xAI. Sastry declined to comment.