The merger XAI – X is a good deal – if you bet on the Musk empire

When Elon Musk announced that his startup on AI, XAI, he acquired his social media company, X (previously known as Twitter), in All-Stock DealHe raised his eyebrows. But in many ways, the deal makes sense. XAI Chatbot, Grok, was already deeply integrated with X, X was financially disintegratedand Musk needed a way to make his acquaintance on Twitter of $ 44 billion to look less like impulsive ingestion and more as a strategic game for Agi Lord.

He also pointed to something deeper about how Musk’s empire works: investing in one of its companies is not in a quick return on investment. It is about buying mysticism around Musk and ingesting a whole story of success that is ahead of the actual numbers.

Some call it a GRIFTpointing to Musk’s story about overproduction and underdevelopmentS But the market is increasingly tolerant-welcoming, even investment, led by a story, especially when the thread that connects the story together is one of the president’s right men.

“All Elon companies today are mostly one company,” Yoni Rehtman, Slow Ventures, told TechCrunch. “All this is already Elon, Inc. there are people who work in multiple companies at the same time. They share a network of capital connections. They do business with each other and it treats them effectively as a company. So (the merger of the XAI-X) simply ceases some of the fiction that the two business is separate.”

Thinking in Musk Bulls like Ron Baron, the founder of the Baron Capital Investment Management Company, is that “every single thing (Musk) does helping everything else” like Baron express itS Other businesses under the control of Musk include Tesla, SpaceX, The Boring Company and Neuralink – some of which It is reported to share resourcesS

“When (Musk) Bought Twitter, did He have in His Mind That There’s an Opportunity to Have This Data, A Tremendous Value for Licensing? When HELLE HE HE WANTED TO GO TOG That is a real opportunity hera for the internet around the world, and there’s gonna be Hundreds of Billions of Dollars of Revenue Opportunity? Into Self-Driving, where you can make hundreds of billions of dollars a year additional profits, and Grok (…) and will you connect cars around the world?

Baron Capital invests in Musk’s ecosystem, an example of investor cross between the various billionaire companies. Companies like 8VC, Andreessen Horowitz, DFJ Growth, Fidelity Investments, Manhattan Venture Partners, Saudi Arabia PIF, Sequoia Capital, Vy Capital and others also occupy positions in the Musk Corporate Network.

This brings us back to the deal XAI-X. Suditis asked how the acquisition could estimate X to $ 33 billion, more than triple his assessment Just a few months ago and how can you estimate the XAI at $ 80 billion by the AI ​​company According to messages There is a little in the revenue path. But evaluations are not always based on what exists today. More recently, they take into account what investors hope – and this is especially true when it comes to Musk’s endeavors.

Just look at Tesla. The electric vehicle manufacturer has been treated as a technological stock for years, despite the fact that there is Automobile ManufacturerBased on the belief that Tesla one day will unlock innovative autonomy in the form of self -driving of cars and humanoid robots.

“The reason why (Tesla’s) is traded with 80 times profit and Comp Group trades 25 times a profit is that people make a bet in the long run and it’s not about what’s happening with the numbers this year,” said Jean Munster, a managing partner at DeepWater. “This is one of the ELON superpowers, this ability to keep investors engaged in the long run.”

The Munster company has invested in X, XAI and Tesla. This is exactly the type of muscular back that is the largest of a deal like the XAI Building X if it is assumed that Musk can really fulfill his promise to marry Trove Data Trove and the XAI distribution platform with XAI and AI expertise infrastructure.

Of course, the consolidated value also comes with an increased risk.

Dan Wang, a professor at Columbia Business School, whose research is hiding at the intersection of business and society, told TechCrunch that the most immediate risk factor for investors is the ongoing case with which X is confronted by the Secondary School and Exchange Commission (SEC). The lawsuit accuses Musk of misleading investors, delaying the disclosure of his previous Twitter investments. SEC claims that this allowed Musk to buy more shares on Twitter at artificially low prices.

Wang has listed several other risk considerations, such as anti -competition and consumer confidentiality concerns, more special about how X quietly chose all users in collecting AI Model training data. The change in withdrawal has already increased the anger of a regulator, DPC of Irelandwho has recently begun to investigate it as a potential violation of the GDPR European Law.

“Another type of risk here is that there is no consensus framework for how the AI ​​market will be regulated, but you are already seeing traces of it in Europe and until recently in California,” Wang said. “Many of these frameworks have to do with how AI models are implemented regarding the distribution of information (…), they attribute the responsibility of the companies that create AI models and provide access to these models.”

Musk can just lose interest in a project, Rehtman said.

“I think this is a lot of Tesla shareholders at the moment,” he said, “Where in the last few months the number one company of the Elon is Trump’s campaign and its other projects have disappeared.”

When asked about some of these risk factors, Munster seemed smoothly. He suggested that they were insignificant given the enormousness of, for example, the value proposal of XAI and the potential to become a dominant player in AI.

“We rely on the belief that AI will be more transformative than what people think,” he said. “What is the value (…) of one of the four brains that the world will work on?”

Rechtman said that Musk Bulls are not blindly loyal, but simply trust Musk’s superpowers to “bend capital markets to his will” in a way that allows him to do things and build a business that no one else can.

“The people who are in these businesses have just gone to Long Elon and they will continue to go Long Elon,” Rehtman said. “So it is not surprising to me that they will just continue to tell you that the emperor wears clothes.”

Not for anything, buying more skillful bets on Musk, such as X, is one of the ways to potentially unlock more investment opportunities in Muskverse, Rechtman said.

“SpaceX is a real thing and it will never become public,” he said. “So the only way to invest in Spacex is to access offers. And the only way to access the offers is to be in the good graces of Elon.”