Fidelity, a prominent investment firm, has marked up the value of its holdings in Elon Musk's X (formerly Twitter) by 32.37% in October, according to a report by Axios. This significant increase in valuation comes despite the firm still undervaluing the company by 72% compared to the $44 billion Musk purchased it for in 2022.

The markup is likely connected to Fidelity's investment in xAI, a Musk-founded AI startup. In October, Fidelity also marked up its xAI shares by 70%. xAI's chatbot, Grok, was trained on X data and is available to X subscribers, suggesting a close relationship between the two companies. Additionally, X may have a significant equity stake in xAI, further solidifying the connection.

The reported markup occurred before Donald Trump's presidential election victory in November, which had a profound impact on X's traffic. Following Trump's win, X experienced a surge in traffic, while competing services like Bluesky saw an influx of new users. This shift in user behavior may have contributed to Fidelity's decision to reevaluate its holdings in X.

Despite the markup, Fidelity's valuation of X remains significantly lower than Musk's original purchase price. This disparity raises questions about the company's long-term prospects and the potential for future growth. As X continues to navigate the ever-changing social media landscape, it remains to be seen how Fidelity's valuation will impact the company's strategy and operations.

The connection between X and xAI also warrants further examination. As AI technology continues to advance, the integration of chatbots like Grok into social media platforms may become increasingly important. Fidelity's investment in xAI and its markup of X holdings suggest that the firm is bullish on the potential of AI-driven social media, but the implications of this trend are still unclear.

In conclusion, Fidelity's markup of X holdings is a significant development in the ongoing saga of Elon Musk's social media venture. While the valuation remains lower than Musk's original purchase price, the connection to xAI and the potential for future growth make this story one to watch in the coming months.