This Week in AI: X recovers, xAI join forces with Nvidia

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X’s valuation bounces back to $44 billion, thanks to xAI

In a surprising rebound, Elon Musk’s social platform X (formerly Twitter) has reclaimed a valuation of $44 billion—its original acquisition price—after sinking to $10 billion just a few months ago. A major factor behind this sharp reversal was Musk’s artificial intelligence (AI) startup, xAI.

Musk bought Twitter for $44 billion in 2022, but shortly afterward, the company hit obstacles that tanked its value. Advertisers pulled out due to concerns over Musk’s content moderation policies, the $13 billion of debt used to finance the acquisition put a strain on the company’s finances, and its revenue model, primarily dependent on subscriptions, failed to gain meaningful traction. On top of that, users who weren’t fans of Musk’s leadership were jumping ship for alternative platforms.

By September 2024, it was discovered that X had dropped to a $10 billion valuation when it issued stock grants to employees. However, a recent secondary market transaction shows X is back at a $44 billion valuation.

A major reason for the rebound, or rather, an incentive Musk provided to keep money flowing into the company, preferably at more attractive valuations, was that he reserved 25% of xAI’s shares for X investors. By structuring things this way, Musk essentially turned xAI into a lifeline for X, creating a situation where investors were encouraged to hold onto their positions in both companies and avoid a down round.

Beyond this clever bit of financial engineering that Musk put together to keep both his companies afloat and increase their value in the process, this move reinforces just how attractive AI is for investors. It shows that the demand for shares of large AI companies remains high even if those companies have not turned a profit yet.

JD Vance outlines Trump’s AI playbook

At the Andreessen Horowitz (a16z) American Dynamism Conference, United States Vice President JD Vance gave the audience a deeper look into the Trump administration’s AI strategy.

“We shouldn’t be fearful of productive new technologies; in fact, we should seek to dominate them. That’s certainly what this administration wants to accomplish,” Vance told the audience. This confirms that the U.S. has been approaching innovative technologies intending to be the leader in those spaces, and one reason it wants to do this is to avoid losing out to geopolitical rivals. This position aligns with Trump’s broader pro-business stance, which has focused on ensuring U.S.-based tech companies face as few regulatory roadblocks as possible.

Vance also addressed one of the biggest concerns surrounding AI—job displacement. 

“Technology should be something that enhances rather than replaces the value of labor,” he said, countering fears that AI will wipe out jobs. Instead, Vance argued that while AI will disrupt industries, it will also create opportunities for workers to focus on more meaningful, high-value work, with AI handling repetitive, mundane tasks.

Anybody watching the administration’s actions to date knows that this has implicitly been the Trump administration’s notion. During the summit, Vance explicitly stated “it’s time to align the interests of technology firms with the interests of America at large.” It’s evident that the White House wants this to be a reality. The administration has already welcomed tech executives into the White House and held discussions on AI, digital assets, and other emerging industries. On top of that, tech mogul Musk has had a strong presence in the White House ever since Trump was elected.

This week, xAI and Nvidia (NASDAQ: NVDA) announced they are joining the AI Infrastructure Partnership (AIP), a newly rebranded initiative originally called the Global AI Infrastructure Investment Partnership. AIP is shaping up to be a direct competitor to StarGate, the AI infrastructure alliance led by OpenAI, Microsoft (NASDAQ: MSFT), and Oracle.

Backed by heavyweights like BlackRock (NASDAQ: BLK), Microsoft, and Abu Dhabi AI investment group MGX, AIP is setting out to deploy an initial $30 billion into AI infrastructure, including data centers and computing power. Their longer-term goal is to scale up to $100 billion, which would put it on par with StarGate, which is also planning to invest at least $100 billion into AI infrastructure development.

For companies like Nvidia and xAI, getting in on a large-scale initiative like AIP comes with benefits. It gives them access to capital, a seat at the table in shaping AI infrastructure standards, and strategic advantages in securing computing power—all of which are becoming increasingly valuable as demand for AI infrastructure continues to skyrocket.

But despite initiatives to expand AI infrastructure and AI companies’ ever-increasing need to raise capital for their AI operations, there remains a question: Is there enough real-world demand for AI services to justify these massive infrastructure investments? Currently, running AI operations is incredibly expensive, and no major AI company has actually profited from its AI divisions.

This raises an important question: Are AI companies scaling because demand exists, or are they stuck in a cycle where they must keep expanding just to stay competitive? So far, the majority of AI adoption has been centered around generative 
applications like chatbots, image generation, and video creation, while only a minority of users seem to demand more advanced AI capabilities. This calls into question whether that demand for more advanced AI can come with a price tag that will bring companies closer to turning a profit on the multi-billion-dollar investments in the infrastructure to run it.

In order for artificial intelligence (AI) to work right within the law and thrive in the face of growing challenges, it needs to integrate an enterprise blockchain system that ensures data input quality and ownership—allowing it to keep data safe while also guaranteeing the immutability of data. Check out CoinGeek’s coverage on this emerging tech to learn more why Enterprise blockchain will be the backbone of AI.

Watch: Transformative AI applications are coming