Fidelity Investments has significantly increased its valuation of Elon Musk’s artificial intelligence startup xAI for the second consecutive month, according to recent regulatory filings released in late December. The Fidelity Blue Chip Growth Fund valued its xAI holdings at $79.9 million at the end of November, representing a 6.4% increase from October’s $75.1 million valuation and a substantial jump from September’s $44.2 million.
The dramatic valuation increases come on the heels of xAI’s successful $6 billion funding round, which the company confirmed in a December 23 blog post. This highly anticipated investment round attracted major institutional investors including A16z, BlackRock, Kingdom Holding, and Lightspeed Venture Partners, alongside Fidelity’s continued participation. The funding round appears to have driven significant appreciation in xAI’s share price, with previous filings indicating the price per share rose from $11.96 in September to $20.35 in October.
Fidelity’s Blue Chip Growth Fund originally acquired 3,688,585 xAI shares on May 13 for approximately $44.2 million, according to the fund’s annual report published in September. While the exact current share count remains unclear following the recent funding round, the consistent monthly valuation increases signal growing confidence in xAI’s competitive position in the artificial intelligence market.
Simultaneously, Fidelity increased its valuation of Musk’s social media platform X (formerly Twitter) to $5.8 million in November, marking a 5% monthly increase and a 39% jump from September. This recovery is notable given that Musk’s $44 billion acquisition of Twitter in 2022 was widely criticized as overvalued. Despite recent gains, Fidelity still values its X stake significantly lower than its original $19.66 million investment made during Musk’s 2022 takeover.
The connection between X and xAI has proven strategically valuable for Musk’s AI ambitions. X has served as a lucrative source of training data for xAI, with the startup using content from the social media platform to develop powerful AI models that compete directly with offerings from OpenAI, Google, and other major tech companies. This synergy between Musk’s companies has created a competitive advantage in the race to develop advanced artificial intelligence systems.
Neither Fidelity, X, nor Musk’s representatives responded to requests for comment on the valuation increases.
Key Quotes
xAI confirmed the $6 billion round in a blog post on December 23.
This quote confirms the massive funding round that drove xAI’s valuation increases. The $6 billion investment represents one of the largest AI funding rounds in recent history and demonstrates strong institutional backing for Musk’s AI ambitions.
X has also been a lucrative source of training data for xAI, which has used content on the social-media platform to develop powerful AI models that compete with similar offerings from OpenAI, Google and other tech companies.
This statement highlights the strategic synergy between Musk’s companies, explaining how X’s vast content repository provides xAI with a competitive advantage in training large language models, creating a vertically integrated AI development ecosystem.
Our Take
Fidelity’s consecutive valuation increases reveal a critical shift in how institutional investors view the AI competitive landscape. While OpenAI and Google have dominated headlines, xAI’s rapid ascent—backed by Musk’s unique access to X’s training data and his ability to attract top-tier investors—suggests the AI market may be more contestable than previously assumed. The $6 billion funding round provides xAI with resources to compete on compute infrastructure, a key bottleneck in AI development. However, questions remain about whether xAI can translate capital and data advantages into market-leading products. The synergy between X and xAI also raises important questions about data privacy and the ethics of using social media content for AI training without explicit user consent, an issue that may attract regulatory scrutiny as AI governance frameworks evolve.
Why This Matters
These valuation increases underscore the intensifying competition in the generative AI market and highlight how established financial institutions are betting heavily on emerging AI startups. Fidelity’s consecutive monthly increases signal growing institutional confidence in xAI’s ability to compete with established players like OpenAI and Google, despite being a relative newcomer to the space.
The $6 billion funding round positions xAI among the most well-capitalized AI startups globally, providing resources to develop compute infrastructure and attract top talent in an increasingly expensive AI arms race. The strategic relationship between X and xAI demonstrates how access to proprietary training data has become a critical competitive advantage, potentially reshaping how AI companies structure their business ecosystems.
For investors and industry observers, these valuations reflect broader market sentiment that AI infrastructure and foundation models represent transformational investment opportunities. The involvement of major institutional investors like BlackRock and Fidelity legitimizes the AI sector’s long-term potential while also raising questions about valuation sustainability in an increasingly crowded market.
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Source: https://www.businessinsider.com/fidelity-boosts-valuation-elon-musk-x-xai-2024-12