Musk's Twitter backers receive 25% stake in xAI

Elon Musk’s investors are poised for substantial gains, thanks to the rising valuation of his artificial intelligence company, xAI. Musk had allocated 25% of xAI’s shares to the backers of his $44 billion acquisition of X (formerly Twitter), offering them a promising return on investment amidst the platform's challenges.

Founded last year to rival AI giants like OpenAI and Anthropic, xAI is reportedly preparing for a new funding round, aiming to raise $5 billion. If successful, the valuation of xAI could double to $50 billion in just six months.

This growth could offset the steep decline in X’s valuation, which plummeted after advertisers withdrew over content moderation concerns. For instance, Fidelity recently marked down its investment in X by nearly 80%, estimating its worth at $9.4 billion.

Key investors in Musk's ventures include Fidelity, Oracle co-founder Larry Ellison, Saudi Prince Alwaleed bin Talal, Twitter founder Jack Dorsey, and prominent Silicon Valley firms like Sequoia Capital and Andreessen Horowitz.

These investors, who initially supported Musk’s Twitter takeover, stand to benefit from xAI’s rapid rise. The banks managing X’s $13 billion debt, such as Morgan Stanley and Barclays, may also see improved prospects.

The opportunity to invest in xAI’s current round is reportedly limited to those who participated in earlier funding stages. This includes prominent names like Andreessen Horowitz, Sequoia, Prince Alwaleed, and Fidelity.