Elon Musk's $113 Billion AI Power Play Is Just Getting Started
Elon Musk is back in the driver's seatand investors are taking notice. His AI startup xAI is launching a $300 million share sale that values the company at around $113 billion, according to people close to the deal. This internal tender offer lets employees cash out while giving new investors a foot in the door. It's also setting the stage for a larger fundraising round that could bring in fresh capital. The $113 billion figure reflects a March restructuring that combined xAI with Musk's social media platform X, pricing the AI business at $80 billion and X at $33 billion. While neither company disclosed deal terms publicly, this structure has allowed xAI to ride a wave of AI optimism, even as X continues to grapple with brand and monetization challenges.
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Musk, who recently stepped away from a brief and chaotic stint advising the Trump administration, says he's back to spending 24/7 at work and sleeping in server rooms. That focus is already showing. xAI's Grok chatbot is now embedded in Telegram, reaching a potential audience of 1 billion users. Meanwhile, Microsoft has partnered with xAI to bring its models to Azure customersa move that could boost both exposure and credibility. The Colossus supercomputer cluster, one of the largest AI infrastructures in the U.S., adds further weight to Musk's plan to build an AI-data-distribution flywheel. While exact mechanics remain vague, the vision is clear: real-time social data from X feeding directly into xAI's models, distributed back across the same ecosystem.
Tesla (NASDAQ:TSLA), the crown jewel in Musk's portfolio, may also benefit from this integration. AI advancements in one cornerparticularly around computing scale and model trainingcould spill over into Tesla's efforts in autonomy, manufacturing, and energy. But investors shouldn't overlook the risks. The transaction structure, governance opacity, and Musk's deep control across multiple companies raise questions about oversight and scalability. Still, the market appears willing to bet on the upside. With investor interest accelerating and partnerships stacking up, Musk's AI empire is positioning itself as one of the most watched stories in techand possibly, one of the most lucrative.
This article first appeared on GuruFocus.
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