Elon Musk's xAI Valuation Soars, Benefiting Twitter Takeover Investors

Did Elon Musk overpay for Twitter? Now with Trump as US President elect and xAI, it looks like a steal

Elon Musk purchased Twitter for a whopping $44 billion, but back then it was considered a very pricey deal, and many thought that Musk was venturing into the wrong kind of business. When he renamed Twitter to X, there was a lot of outcry and worry about the future of this social media platform. However, it is this very X, that led to the affinity of Donald Trump towards Elon Musk, earning the latter a position as a co-head in an all-important federal department in the upcoming Trump administration. Elon Musk had been quite vocal throughout the US presidential campaign on his X handle, where he was vividly supporting Donald Trump, and the Republicans too, followed suit. Trump was also invited for X Spaces interviews, where he spoke his heart out with Musk and got major traction through online medium, instead of using the conventional mediums of promotion and advertising. This was majorly a handiwork of Barron Trump, the son of Donald Trump, who has been stressing on the importance of social media presence for his father throughout the US Presidential election campaign. Also Read : Is this startup the next Nvidia? Samsung, LG and billionaire Jeff Bezos are all investing in it; here's what it is doing to become the next AI powerhouse Now, with Elon Musk's other venture xAI in the picture, X's own valuation could increase even more as the social media platform has been a superb source of training data for xAI, an organization he had formed after his fallout with OpenAI CEO Sam Altman. What is xAI all about? xAI is an artificial intelligence company founded by Elon Musk with the goal of understanding the true nature of the universe. The company aims to develop AI models capable of solving complex problems and pushing the boundaries of science. Who is the owner of X? X, formerly known as Twitter, is a social media platform owned by X Corp, a company controlled by billionaire Elon Musk.

Elon Musk's Twitter backers gain windfall from xAI deal

Investors in Elon Musk's takeover of Twitter are set to make a huge windfall from a surge in the valuation of his artificial intelligence company, reaping rewards from being loyal backers of the billionaire's business empire. Musk has given investors that backed his $44bn Twitter acquisition 25 per cent of the shares in xAI, which he founded last year to take on rivals such as OpenAI and Anthropic. xAI is set to close a new $5bn fundraising round as early as Wednesday, according to people with knowledge of the talks, doubling its valuation to $50bn in just six months. That has meant some of Musk's backers, who were sitting on billions of dollars of unrealised losses from the Twitter takeover, could be made "whole" through shares in xAI thanks to the start-up's massive rise in value. Those set to benefit as investors in both Musk companies include Fidelity, Oracle co-founder Larry Ellison, Saudi Prince Alwaleed bin Talal, Twitter founder Jack Dorsey and Silicon Valley venture firms Sequoia Capital and Andreessen Horowitz. The connections between the Musk businesses are the latest example of the overlapping incentives for those who support his ventures, which also include electric-car maker Tesla and rocket builder SpaceX. Many of his financial backers have justified their support of the takeover of Twitter, since renamed X, as a bet on Musk and a means to stay within his orbit. That thinking has been considered especially prescient as Musk has become a close confidant of president-elect Donald Trump. "There are few adages in tech that really hold up," said one investor in Musk's companies. "Never bet against Elon is one." When this week's funding round closes, xAI will have raised about $11bn of investment in total, needed for the huge spending required to build AI models and one of the world's largest clusters of supercomputers. Its rapid growth has been a boon for Twitter equity investors, from whom Musk secured $7.1bn to fund the takeover, with the rest generated by bank loans and Musk's own fortune, including from selling Tesla shares. Banks including Morgan Stanley and Barclays are sitting on about $13bn of Twitter debt. Since then, the value of the social media platform has crashed as advertisers have abandoned the site over content moderation concerns. Fidelity, which publicly discloses the value of its stake in X, has written down its investment by nearly 80 per cent, giving it a current value of $9.4bn. xAI carried out a $6bn fundraising in May, its first major cash injection from outside investors, which gave it a post-money valuation of $24bn. Many of Musk's X backers chose to put even more cash into the start-up deal, such as Andreessen Horowitz, Sequoia Capital, Prince Alwaleed and Fidelity. In its latest $5bn fundraising, only investors who had backed xAI in its previous fundraising had been permitted to invest, according to several people close to the matter. Musk wrote on X in November 2023 that X investors would own 25 per cent of xAI, but did not give further details. People with knowledge of the matter said X investors had been granted a quarter of the equity in xAI across both fundraising rounds. Their stake was not diluted by the new shares issued following the close of the latest fundraise, they added. While proving to be lucrative, the connected deals create a complex set of considerations for investors in Musk's companies. "It's hard to manage conflicts of interest on this sort of stuff," said an investor in one of the companies. "You have to be a fiduciary and you're on both sides."

Musk investors who got hosed on Twitter takeover set to reap windfall...

High-profile investors who took painful losses backing Elon Musk's takeover of Twitter are now in line for a sweet consolation prize -- in the form of surging stakes in Musk's artificial intelligence startup, according to a report. Musk has given 25% of the shares in xAI, which Musk founded last year, to investors who helped fund his $44 billion acquisition of the social media platform X, formerly known as Twitter, in 2022, sources with knowledge of the talks told the Financial Times. XAI is set to close a $5 billion fundraising round as early as Wednesday - doubling the company's valuation to $50 billion in just six months, according to the paper. Those who backed Musk's takeover of Twitter - which has seen advertisers and users flee due to concerns over a lack of content regulation - have been sitting on billions of dollars worth of unrealized losses. But xAI's gains could help them recoup the unfavorable investments. Investors set to benefit from stakes in both Musk companies include Fidelity, Oracle co-founder Larry Ellison, Saudi Prince Alwaleed bin Talal, Twitter founder Jack Dorsey and venture firms Sequoia Capital and Andreessen Horowitz, according to the report. The unique "reward" system is Musk's latest way of intertwining his companies, which also include rocket manufacturer SpaceX and electric vehicle maker Tesla. Many of the investors who helped fund Musk's purchase of Twitter justified it as an investment not in X, but in Musk himself. "There are few adages in tech that really hold up," one investor in Musk's companies told the Financial Times. "Never bet against Elon is one." The billionaire's AI startup has grown rapidly and will have raised about $11 billion in total investments after this week's funding round shuts - welcome growth for Twitter investors, who funneled about $7 billion into Musk's acquisition. "It's hard to manage conflicts of interest on this sort of stuff," an investor in one of the companies told the Financial Times. "You have to be a fiduciary and you're on both sides." In May, xAI completed a $6 billion fundraising round to give it a $24 billion valuation. Some of those who backed Musk's Twitter purchase, like Andreessen Horowitz, Sequoia Capital, Prince Alwaleed and Fidelity, poured more investments into the startup. During its latest fundraising round, Musk permitted only previous xAI backers to make new investments, several people close to the matter told the Financial Times. Musk's clout has only grown over the past year as he has become a close confidant of President-elect Donald Trump. Musk, the world's richest person with a net worth of $324.2 billion according to Forbes, pumped more than $100 million into the Trump campaign via pro-Trump PACs and rallied on the candidate's behalf in swing states. Since Trump's win, Musk has remained nearby, meeting with Trump allies and Cabinet wannabes at the president-elect's Mar-a-Lago residence. He even achieved "uncle status," according to Trump's granddaughter. Musk's influence on Trump is clear after the president-elect picked up Musk's pitch to start a Department of Government Efficiency - and appointed the tech junkie to lead it. Though Trump's pick for Treasury Secretary -- "business-as-usual" Scott Bessent, as Musk called him -- shows the billionaire doesn't always get his way. Since Musk took over the platform and rebranded it X, the social media platform's value has tanked. Advertisers fled the platform as racist and antisemitic posts cropped up alongside their paid ads, and after Musk endorsed an antisemitic post. Left-leaning celebrities have also posted "goodbyes" to their millions of X followers and turned to rivals like Bluesky or Threads over calls for Musk to better regulate the platform. Banks including Morgan Stanley and Barclays are currently sitting on $13 billion worth of Twitter debt, and Fidelity has written down its X investment by nearly 80% to a $9.4 billion valuation, according to the report.

Elon Musk's xAI Just Doubled Its Valuation to $50B -- Who Are the Biggest Winners?

Venture capital firms like Andreessen Horowitz and Sequoia Capital have doubled down on their xAI investments. Given the overlapping nature of Elon Musk's web of companies, it isn't unusual for investors in one of the billionaire's ventures to back his other projects in what often represents a broader bet on Musk himself. This is the case for several investors in Musk's 2022 acquisition of Twitter, now X, who are now set to receive a windfall from their stakes in xAI, the A.I. startup Musk launched last year to compete with the likes of ChatGPT-maker OpenAI. Sign Up For Our Daily Newsletter Sign Up Thank you for signing up! By clicking submit, you agree to our <a href="http://observermedia.com/terms">terms of service</a> and acknowledge we may use your information to send you emails, product samples, and promotions on this website and other properties. You can opt out anytime. See all of our newsletters There's no question that Musk's $44 billion purchase of X hasn't exactly paid off financially for investors like Oracle CEO Larry Ellison, Twitter co-founder Jack Dorsey and cryptocurrency exchange Binance. In October, Fidelity Investments -- another X investor -- estimated that the social media company's worth had fallen to $12.5 billion. But Fidelity, alongside other X backers, have made up much of these losses through their stakes in xAI. The A.I. startup, which counts the chatbot Grok as its main product thus far, has grown rapidly in recent months. In November, it reportedly raised $5 billion in a round that more than doubled its previous valuation to $50 billion. Besides participants like Valor Equity Partners, CoreNest Capital and the Qatar Investment Authority, the round drew in X backers like Andreessen Horowitz and Sequoia Capital, who also previously participated in a $6 billion Series B round that valued the startup at $24 billion in May. Besides injecting a total of $11 billion into xAI, the funding rounds signify that investments in Musk's tangled ecosystem might finally be paying off -- for now. Here's a closer look at some of the X backers who are set to reap the rewards of xAI's soaring valuation: Fidelity Investments Fidelity, which backed Musk's X acquisition through its Blue Chip Growth Fund, valued its initial X stake at $19.66 million. Subsequent estimates from Fidelity showed a significant dip in value, with its stake valued at around $4.2 million as of September. Although this figure rose to $5.5 million in October, it still represents a 72 percent decrease from 2022. But the mutual fund manager, which also backed xAI during its May funding round, has seen its investments in Musk's A.I. startup move in a more positive direction. Valued at $44 million in September, Fidelity in October estimated that its xAI stake rose by 70 percent to $75 million. Prince Alwaleed bin Talal An early Twitter investor, Saudi Prince Alwaleed bin Talal pledged $1.9 billion towards Musk's $44 billion acquisition in 2022. Taking into account Fidelity's estimates of X's plunging value, his stake should now be worth around $530 million -- but the investor doesn't seem too bothered about the social platform losing money, telling the Washington Post in September that he is still "very happy with the alliance with Mr. Musk." Despite a drop in X's value, Prince Alwaleed and his investment company Kingdom Holding additionally participated in xAI's $5 billion fundraising earlier this year. During the round, Kingdom Holding invested $400 million in xAI, according to financial filings first reported by the independent journalist Wendy Siegelman. Andreessen Horowitz Andreessen Horowitz, a venture capital firm that helped fund Musk's X takeover with a $400 million investment now valued at around $112 million, also participated in xAI's May funding round and backed Musk's startup during its November fundraising. As one of the largest VC firms investing in A.I. companies, Andreessen Horowitz's portfolio includes the likes of Mistral AI, a French startup founded by former DeepMind and Meta (META) researchers; World Labs, a new venture from Stanford's Fei-Fei Li; and Safe Superintelligence, which was recently launched by former OpenAI chief scientist Ilya Sutskever. The firm's A.I. bet has even seen Andreessen Horowitz establish an A.I. chip lending program that rents graphics processing units (GPUs) out to startups in exchange for equity. Sequoia Capital Sequoia Capital has longstanding ties to Musk's companies, having invested in SpaceX and The Boring Company. Roelof Botha, the managing partner of the venture capital firm, previously worked on PayPal (PYPL) with Musk and in 2022 vouched for his leadership of X while committing $800 million towards the takeover -- an investment now worth around only $224 million. Given its history of Musk-related investments, it should come as no surprise that Sequoia participated in both of xAI's funding rounds this year. The firm has funneled around $150 million into A.I. companies like xAI, OpenAI and Safe Superintelligence, said Sequoia partner Pat Grady in September, adding that even more funds have been invested into startups working at the application layer.

Jack Dorsey, Larry Ellison Among Elon Musk's Twitter Backers Set To Gain Windfall From xAI Deal - NVIDIA (NASDAQ:NVDA), Tesla (NASDAQ:TSLA)

Investors who supported Elon Musk's acquisition of Twitter are reportedly seeing significant returns due to the rising valuation of his AI company, xAI. These investors, who received a 25% stake in xAI, are poised for substantial gains. What Happened: xAI, founded by Musk last year, is reportedly nearing the completion of a $5 billion fundraising round. This could potentially double its valuation to $50 billion within six months, offsetting some of the unrealized losses from the Twitter deal. Notable beneficiaries include Fidelity, Oracle co-founder Larry Ellison, Saudi Prince Alwaleed bin Talal, and Jack Dorsey. The strategic intertwining of Musk's ventures, including Tesla Inc. TSLA and SpaceX, underscores the benefits for those backing his enterprises. The latest funding round will bring xAI's total investment to approximately $11 billion, crucial for its AI model development and supercomputer infrastructure, the Financial Times reported on Wednesday. See Also: Musk Tweet Sparks Dogecoin Surge, Fuels Speculation On X Payments Despite Twitter's declining value, xAI's growth has been advantageous for Musk's backers, who initially contributed $7.1 billion for the Twitter takeover. The Financial Times noted that only previous xAI investors could participate in the latest fundraising, maintaining their stake undiluted. xAI is yet to respond to Benzinga's queries. Why It Matters: The rise in xAI's valuation comes as the company seeks to raise up to $6 billion to acquire 100,000 Nvidia Corp. NVDA chips for its Memphis data center. This move is part of xAI's strategy to bolster its AI capabilities and infrastructure. Additionally, Cathie Wood's ARK Venture Fund has opened up investment opportunities in Musk's private ventures, including xAI, SpaceX, and the rebranded social media platform X. The ARK Venture Fund ARKVX would give exposure to the companies, with xAI representing 1.5% of the portfolio. Read Next: Elon Musk Slams California's Proposal To Shut Tesla EVs Out Of Consumer Rebates In State: 'This Is Insane' Disclaimer: This content was partially produced with the help of Benzinga Neuro and was reviewed and published by Benzinga editors. Photo via Shutterstock Market News and Data brought to you by Benzinga APIs

Elon Musk builds xAI, world's largest AI computing system in just 16 months, sparks anxiety among rivals like OpenAI; here's how he did it

Elon Musk's xAI has redefined the AI landscape, achieving a staggering $50 billion valuation in just 16 months -- a feat that took industry leader OpenAI over nine years. Elon Musk's xAI has emerged as a major player in the artificial intelligence industry, achieving a $50 billion valuation just 16 months after its founding in July 2023. The company has surpassed rivals like Anthropic ($19 billion) and Perplexity ($2.8 billion) while quickly building the world's largest AI computing system. Musk's venture is now valued higher than his acquisition of Twitter, marking a transformative period in the competitive AI sector. Valuation Milestone: xAI reached a valuation of $50 billion in just 16 months, compared to OpenAI, which took over nine years to hit the same milestone. Funding Success: The company raised $5 billion in its latest funding round, supported by Valor Equity Partners, Sequoia Capital, Andreessen Horowitz, and the Qatar Investment Authority. Infrastructure Development: Acquired 100,000 Nvidia chips to power its Memphis supercomputer, enabling rapid AI advancements and supporting Tesla's Full Self-Driving (FSD) technology. Also Read : Playing Nice: Baby swap drama's trailer, plot and production team xAI's Memphis supercomputer was constructed in record time -- just 19 days -- on a former manufacturing site. Nvidia CEO Jensen Huang highlighted this as unprecedented, stating that similar projects typically take three years to plan and over a year to execute. The Memphis facility is designed to house 100,000 Nvidia GPUs, making it the fastest supercomputer globally in a single cluster. The supercomputer plays a crucial role in xAI's AI developments and future plans to double its AI chip capacity. AI Chatbot Grok: xAI developed Grok, an AI chatbot inspired by The Hitchhiker's Guide to the Galaxy. Grok competes directly with OpenAI's ChatGPT, Google's Gemini, and Anthropic's Claude. Language Model: The chatbot is powered by xAI's proprietary Grok-2 large language model, showcasing high natural language understanding. Training via X Platform: Elon Musk's social media platform, X, serves as a data source for training Grok, leveraging real-time user interactions to improve chatbot responses. Also Read : The show that gave Donald Trump the election; it was Barron who asked the President-elect to appear on it xAI's rapid rise underscores its strategic approach to funding, infrastructure, and product innovation, positioning it as a formidable force in the AI sector. The company's future goals include expanding its AI capabilities with additional infrastructure investments and technological advancements. What is xAI's valuation, and how quickly was it achieved? xAI achieved a valuation of $50 billion in just 16 months since its founding in July 2023. Who were the key investors in xAI's latest funding round? Valor Equity Partners, Sequoia Capital, Andreessen Horowitz, and the Qatar Investment Authority contributed to a $5 billion funding round.