Fidelity has raised its valuation of X Holdings by 32.37% in October, marking the largest monthly increase since it helped Elon Musk acquire the company in 2022. Despite the boost, X Holdings' current value is still about 72% below the $44 billion Musk paid for the company. This significant upward revision highlights ongoing speculation about the platform’s potential, especially as new initiatives, like Musk’s xAI, gain traction.

Fidelity, a key shareholder in X, started marking down its shares just a month after Musk took control. However, it’s important to note that Fidelity’s assessment of X Holdings is not based on direct knowledge of the company's financial performance. The firm does not disclose the specific methods it uses to determine valuations of privately held companies like X. The jump in X Holdings’ valuation contrasts with the performance of comparable tech companies, such as Meta and Snap, which saw no similar stock price increases in October—Meta, in fact, lost value during that period.

The likely catalyst for this boost in valuation is xAI, a separate company also owned by Musk that is training its large language model using data from X. Fidelity, which had invested in xAI’s $6 billion Series B funding round, marked up its holdings by around 70% in October. While the Series B investment represents fresh capital, there have been reports that X Holdings holds a substantial equity stake in xAI. If this is true, it could provide the explanation for the recent rise in X’s valuation, as xAI’s growth could directly benefit X Holdings, enhancing its overall financial outlook.

The connection between X and xAI is important because Musk’s long-term vision for the company involves integrating AI with social media, potentially reshaping how people interact with digital platforms. As xAI trains its models using vast datasets from X, the synergies between the two companies could lead to innovative advancements in AI-driven social media tools. This aligns with Musk’s broader strategy of transforming X from a social media platform into a multifaceted digital ecosystem, driving both user engagement and future revenue growth.

Despite the valuation jump, X Holdings still faces significant challenges. Even with the recent rise in valuation, it remains far from the $44 billion price tag Musk initially paid for the company. While xAI’s growth and potential could play a role in closing that gap, the road ahead for X Holdings remains uncertain, particularly given the shifting dynamics of the social media and tech landscapes. However, investors like Fidelity may continue to revise their valuations based on the evolving relationship between X and xAI, as well as any future developments in Musk’s business ventures.

For business leaders and investors, the situation serves as a reminder of the volatility that can come with investments in private companies, particularly those under high-profile leadership like Musk’s. While valuations can fluctuate dramatically, the connections between companies in Musk’s portfolio, such as X and xAI, will likely be key to understanding the long-term value of X Holdings.