Elon Musk's xAI is raising $6 billion at a $50 billion valuation, but institutional investors are seeing something bigger than just another AI play. The timing - just days after his appointment to lead Trump's Department of Government Efficiency (DOGE) - has Wall Street connecting unexpected dots.
He turned PayPal from a tiny, off-the-radar startup… to a massive $64 billion giant.
BREAKING DEVELOPMENTS
Sources reveal the funding's structure: $5 billion from Middle East sovereign funds and $1 billion from strategic investors, earmarked for 100,000 Nvidia chips at a new Memphis data center. The raise is expected to close early next week.
"This will send shockwaves through the system," Musk stated Tuesday. By Friday, major institutions were rushing to update their positions:
Morgan Stanley notes Musk's "significantly evolved" power
Bank of America raises Tesla target to $350
Wedbush calls this a "Goldilocks scenario"
Apollo CEO signals "wholesale change" ahead
STRATEGIC TIMING
The funding announcement comes as Musk begins actively working with the Trump administration on its approach to AI and tech policy. Trump plans to repeal Biden's AI executive order, stating support for "AI Development rooted in Free Speech and Human Flourishing."
MARKET RESPONSE
Tesla shares continued their post-election rally, up 31% since Trump's victory, as investors digest the implications of Musk's expanding influence in both private and public sectors.
"The convergence of AI infrastructure and regulatory oversight creates unprecedented opportunity," notes Apollo Global Management CEO Marc Rowan. "This represents the kind of wholesale change markets have been waiting for."
LOOKING AHEAD
With the funding expected to close next week and Musk's DOGE role taking shape, markets are moving quickly to position for what comes next. Several key infrastructure companies are seeing increased institutional accumulation.
EDITOR'S NOTE:
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