Dive Brief:

• Former Morgan Stanley dealmaker and long-time Elon Musk advisor Anthony Armstrong has been appointed CFO for both xAI, as well as social media site X, according to a report by the Financial Times citing people familiar with the matter. He will oversee the finance function for both the AI company and social media platform, the FT reported — replacing Mahmoud Reza Banki as X’s finance chief and stepping up as CFO for xAI following the departure of previous CFO Mike Liberatore to rival company OpenAI’s top finance seat, CFO Dive previously reported.
• The move comes shortly after Musk in March announced xAI had acquired social media site X in an all-stock transaction, a deal which valued the combined entity at approximately $113 billion, according to an X post by the tech billionaire. The futures of both platforms are “intertwined,” Musk said in the post, noting the combination “will unlock immense potential by blending xAI’s advanced AI capability and expertise with X’s massive reach.”  
• The choice of Armstrong as CFO points to “near-term monetization and cost discipline at X, and a sustained capital raise for xAI,” Shawn Cole, president of boutique executive search firm Cowen Partners told CFO Dive in an email. With the appointment, “expect a heavy finance agenda: large-scale fundraising, balance-sheet cleanup at X, and aggressive capex for AI infrastructure,” Cole said. “It’s also worth noting that Musk is not shy about using leverage to buy and scale his companies, which makes an investment-banking CFO an even more logical choice.”

Dive Insight:

Armstrong’s appointment “fits a familiar Musk pattern of elevating trusted dealmakers form his network into pivotal operating roles, especially those who’ve already executed for him,” Cole told CFO Dive. “From a recruiting standpoint, this is smart because he needs people who can operate at his pace within his ecosphere, and he has a deep bench across his entities to draw talent from.”

At Morgan Stanley — where Armstrong was global head of technology M&A beginning in 2015 — he advised Musk during his 2022 acquisition of Twitter, now X. When Musk led the Department of Government Efficiency, Armstrong served as senior advisor to the Office of Personnel Management, a critical government department overseeing the federal workforce, Time Magazine reported.

Armstrong’s track record during the Twitter sale, and the subsequent move to take the company private, “signals tighter integration and centralized control across the ‘everything-app’ and AI stack,” Cole said.

Armstrong will assume finance responsibilities for both businesses at a time when the AI race continues to heat up, with top companies wresting for capital, talent and prestige in the expanding market.

The rivalry between ChatGPT parent OpenAI and xAI — which operates the chatbot Grok — has intensified in recent months, with xAI’s former finance chief Mike Liberatore abruptly departing the company before moving to the top finance seat at OpenAI, CFO Dive previously reported. The two companies, alongside Anthropic and other AI players, have also taken steps to secure additional funding in the face of a competitive market and the rising cost of computing power.  

Anthropic, for example, recently raised $13 billion in a funding round granting it a $183 billion valuation, while OpenAI completed a $10.3 billion secondary share sale, CNBC reported. Last month, xAI reportedly secured a $10 billion funding round valuing the entity at $200 billion, according to a CNBC report citing sources with direct knowledge, following a $10 billion round in July.

In a post on his X account, Musk called the report “fake news” and noted xAI is “not raising any capital right now.”

Still, the need for future funding may also speak to the reasonings behind Armstrong’s appointment to the CFO seat at the Musk-owned AI entity. While many companies may be going “back to basics” and are hiring CFOs with traditional operator or certified public accountant profiles, “the AI industry remains in a bull market where [investment banking]-trained CFOs are prized for deep investment and financing of infrastructure,” Cole said.

xAI did not immediately respond to requests for comment.