Artificial Intelligence

Gulf investors ‘rewarded’ as Musk’s xAI absorbs X

April 3, 2025, 2:19 PM

U.S. President Donald Trump's adviser Elon Musk reacts during a rally in support of a conservative state Supreme Court candidate of an April 1 election in Green Bay, Wisconsin, U.S. March 30, 2025. REUTERS/ — Analysts say the deal will allow Elon Musk's xAI to train its AI assistant, Grok, more efficiently

Musk’s xAI buys X for $33bn
Saudi and Qatari backers benefit
Investors get ‘slice of a bigger pie’

Gulf co-investors in Elon Musk’s X could benefit from the social media platform’s purchase by xAI, analysts have told AGBI.

The deal is expected to help artificial intelligence company xAI train Grok, its AI assistant, to compete in the increasingly competitive generative AI market.

Musk’s xAI acquired privately-held X last week in a deal that valued the social media platform at $33 billion – which would have been $45 billion before debt – pushing the platform’s value above the $44 billion he and other investors bought it for in 2022.

Among those other investors were Saudi Arabia’s Kingdom Holding, which put up nearly $2 billion of the price, and the Qatar Investment Authority, which handed over $375 million. Kingdom Holding also bought a $400 million stake in Musk’s xAI in December.

The deal “rewards Musk’s co-investors in the 2022 take-private with a slice of a bigger pie and access to an AI platform that is being developed to compete with other market leaders in the same space, such as ChatGPT,” Fabrizio Carpanini, corporate partner at Dorsey, an international law firm, told AGBI.

“For investors, the expansion of services from social media to AI provides the prospect of a platform with the potential to grow rapidly,” Carpanini said.

Investors can also expect to deepen their involvement in the wider Musk ecosystem, according to Winston Ma, adjunct professor of NYU School of Law, said.

“For the investors involved in Musk’s various businesses, this may be the beginning to see Musk driving synergies across his different holdings – from AI models and media data, to software and hardware, for example,” Ma said.

“The deal could also train xAI’s Grok more efficiently,” he said.

The value of X fell an estimated 70 percent after Musk’s purchase, according to Fidelity, a fund manager that backed the deal. X’s $45 billion sale to xAI represents a whiplash that pushes it slightly above the original purchase price.

But this valuation may be questionable, according to Ahmad Shadid, an entrepreneur and founder of AI company o.XYZ.

X’s financial performance has faced challenges under Musk’s leadership, including significant advertiser losses and a strategic shift toward subscription models, Shadid said.

The $45 billion valuation “reflects strategic priorities rather than an accurate representation of X’s current market standing,” Shadid said.