Editor’s Note: On Tuesdays we turn the spotlight outside of Porter & Co. to bring you exclusive access to the research, the thinking, and the investment ideas of the analysts who Porter follows.
If you’re new to Porter & Co. and want to find out more about The Spotlight you can go here – and if you want access to all past Spotlights you can find them here.
At Porter & Co., we’ve written a lot about Elon Musk – good and bad – and in last week’s Spotlight, Matt Milner took us inside Elon’s Empire and revealed how you could get exposure to his extraordinary companies — before they go public.
If you missed last week’s issue, you can read it here.
This week he returns to detail Musk’s next trillion-dollar target.
Enjoy.
P.S. After Porter saw Matt Milner’s analysis on Elon’s Next IPO, he recorded a short video exposing one of his biggest “investing screw ups” and how you can use his loss to potentially profit from one of “the biggest IPOs of all time.”
You can click here to see Porter’s video.
Musk’s Next Target: A $15.7 Trillion Market
OpenAI crushed it last week.
As The Wall Street Journal reported, the Artificial Intelligence (“AI”) startup raised $40 billion. That’s the largest round a private startup has ever raised. It’s a new record.
Furthermore, it increased the company’s valuation to $300 billion, which makes it the highest-valued private company on Earth.
To many, this reinforced OpenAI’s position as the top dog in AI. After all:
- Its chatbot, ChatGPT, was the first publicly-available technology that could harness the powers of AI. It reached 100 million users in record time.
- OpenAI continues to release new models that are state-of-the-art, so theoretically its technology keeps improving.
- Barron’s says OpenAI founder Sam Altman is a “Tech industry star” and a “deep thinker.” And with a $15.7 trillion market up for grabs, Altman is playing to win.
Altman should be on top of the world right now. But trouble is brewing.
A new competitor has emerged: Elon Musk.
And as you learned last week, you should never — never — bet against Elon…
Never Bet Against Elon
As we explained in Part 1 of this series, Musk has been getting slaughtered lately:
Protesters are targeting Tesla vehicles and dealerships across the country. The media is up in arms about his wild political antics. And Tesla’s recent stock market slide has personally cost him $121 billion.
But I wouldn’t count him out.
In fact, I’d never bet against him. Never.
Because no matter how much the odds seem stacked against him, in the end, everything Elon touches seems to turn to gold…
Zip2, PayPal, Tesla — each faced existential challenges and seemingly impossible odds. But with Musk at the helm, they succeeded beyond anyone’s wildest dreams.
And now, with his sights set on Sam Altman’s OpenAI, Musk is at it again…
Musk Versus Altman
Once upon a time, Musk and Altman were close.
In 2015, they co-founded OpenAI as a non-profit dedicated to developing artificial general intelligence (AGI) for the benefit of humanity. Their shared vision aimed to ensure that AI technologies would be accessible to all, and used ethically.
But by 2018, their views on the best strategic direction for the company had diverged. Musk proposed transforming OpenAI into a for-profit entity under his leadership, and to merge it with Tesla to leverage resources and reach scale more quickly. When Altman rejected these ideas, Musk quit.
In March of 2023, Musk launched his own AI company, xAI. Positioning it as a competitor to OpenAI, he developed the Grok chatbot, and integrated it with his social platform X (formerly Twitter).
Legal disputes ensued. meanwhile, the market for AI started booming…
AI Is Transforming Every Sector
Artificial intelligence refers to a type of technology that’s essentially human-like in what it can do. Just like a person, it can perform highly complex tasks, like reasoning, decision making, or creating.
The thing is, we’ve reached a moment in time when AI is advancing exponentially. These advances are transforming every industry — from healthcare, where AI is diagnosing disease and saving lives, to futuristic sectors like self-driving cars and humanoid robots.
That’s why so many of today’s top business leaders, like Microsoft CEO Satya Nadella, believe AI will be bigger than the internet, bigger than mobile, bigger than cloud computing.
These are trillion-dollar industries. And AI is expected to be bigger than all of them combined. Add it all up, and global consultancy PwC says the AI sector could be worth $15.7 trillion by 2030.
Presumably, the importance and vast size of this market wasn’t lost on Elon.
And based on the speed at which he launched and commercialized xAI, it was clear that, just like Sam Altman, he was playing to win…
xAI: the Fastest-Growing AI Company in America
Here’s the first thing to understand about Elon’s new AI company, xAI:
It’s moving fast. Lightning fast. And the world has taken notice.
For example, in just 16 months, xAI reached a valuation of $50 billion. It took OpenAI nine years to reach that level.
But it makes sense. After all, xAI is powered by a real-world supercomputer. It’s called Colossus, and it contains a whopping 100,000 Nvidia chips. Just these chips alone are worth about $4 billion. If xAI were a country, it would be in the top 100 for economic output. Essentially, xAI has become akin to a global superpower.
And thanks to its superpower performance, xAI’s revenues are exploding. Its revenues have grown from $5 million in 2023, to an estimated $100 million in 2024.
That’s an increase of almost 2,000%. And keep in mind, we’re still in the first inning.
It really makes you wonder:
How did Elon make this happen so fast? How does he do it?
As it turns out, the answer is simple. Essentially, Elon controls a keiretsu.
Perhaps you’ve heard this word before. It’s Japanese. Basically, a keiretsu is a powerful business network. And since each business in the network has common shareholders, each is incentivized to help the other businesses succeed.
Keiretsus have proven to be incredibly effective. Starting in the 1950s, they ruled Japan.
And now Elon has created a Keiretsu. The network of companies he controls includes xAI, Tesla, SpaceX, X (formerly Twitter), Neuralink, and many others.
So when Elon needed to scale up xAI at the speed of light, he called on his keiretsu.
For example, xAI needed power for its supercomputer. Insane amounts of power. So what did Elon do? He had Tesla send in racks and racks of its PowerPacks.
But then he needed the packs reengineered and optimized, so they’d work at peak performance for xAI. So Elon flew in his top engineers from Tesla and SpaceX to work on them in real-time, on site.
For anyone else, this would have taken years. For OpenAI, it took almost a decade. But just like he always does, Musk got it done almost instantly.
Bottom line: Elon’s keiretsu gives xAI instant access to his network of people, products, and knowledge.
Most people don’t realize just how interconnected his companies are.
For instance, look at X. Analyzing all the posts and content on X feeds xAI. It makes it more human-like.
And as you probably saw in the news, xAI just bought X outright. So now they’re the same company. This gives xAI a huge advantage over its competitors like OpenAI.
Think about it. Every year on X, there are about 170 billion posts. Over the years, that adds up to trillions and trillions of posts.
And now, xAI has exclusive access to use these posts to make its technology — its large-language model — even stronger.
X also gives xAI a way to reach hundreds of millions of users. As Elon noted in his post on X about the acquisition, X now has 600 million users. That’s a massive pool of potential users who can be introduced to xAI.
So that’s xAI and X.
But now let’s look at xAI and Tesla. For starters, xAI is helping Tesla with its self-driving features. In turn, Tesla helps make xAI smarter. And remember, Tesla is one of the best-performing stocks of all time. Since Elon took it over twenty years ago, it’s grown in value by about 1,200,000%.
And now, as you’re starting to understand, as Tesla grows, so does xAI. And as X grows, so does xAI.
The thing is, as Elon’s keiretsu helps xAI become more and more powerful, xAI’s revenues should likely keep getting bigger and bigger. And that brings us to the second thing you need to understand about xAI…
Virtually Endless Ways To Make Money
From the $15.7 Trillion AI Market
xAI is already bringing in about $100 million in annual revenues. But as I mentioned, we’re still in the first inning. Let’s look at the many ways it can increase its revenues.
First, AI companies like xAI make money by licensing their technology to others. This creates consistent revenues, which is great for long-term growth. By 2030, this market is expected to be worth $2 billion.
Then there’s Consulting and Advisory Services.
Most companies today are excited to leverage AI, but AI is completely new to them. That’s why they need help figuring out how to use it and maximize its value. That’s where consulting services come in.
Companies like xAI can charge huge fees to give advice, and to help their partners integrate AI into their existing systems. This is a massive opportunity. By 2030, consulting and advisory services as an industry will be worth nearly half a trillion dollars.
Then there’s Data Monetization.
AI companies are sitting on an almost unimaginable amount of data. And as the saying goes, “Data is the new oil.”
AI companies can anonymize this data, and then sell it to third parties. This is another huge opportunity for xAI. In just a few years, this market is expected to be worth $12 billion.
Then there’s SaaS Solutions.
Maybe you’ve heard of SaaS before. It stands for Software-as-a-Service.
Basically, instead of buying software outright, and then buying expensive computers to install the software on, businesses can simply buy a subscription to get online cloud access to any software they need.
This way, they don’t have to worry about keeping their software up to date, plus they don’t have to worry about buying and managing computers and hardware.
By 2030, the SaaS industry is expected to be worth over $1.2 trillion. And xAI is perfectly positioned to tap into this pot of gold.
And finally, there’s Digital Transformation.
If you’ve seen the news lately, you’ve probably heard about DOGE — Elon Musk’s “Department of Government Efficiency.”
Basically, Elon’s been asked by President Trump to cut federal spending by doing things like reducing waste, detecting fraud, and streamlining operations.
This is the sort of thing that AI excels at. It can analyze huge datasets to do things like identify patterns of waste, optimize processes — and ultimately, reduce spending.
This is a huge opportunity for our government. And a huge opportunity for xAI.
According to Statista, spending on such digital transformation last year reached $2.5 trillion. And by 2027, it’s expected to reach $3.9 trillion.
Furthermore, these numbers track with a study from top consultancy McKinsey, which found that “digitization has the potential to unlock over $3.5 trillion of economic value for the government and public sector.”
Add up all these revenue sources, and you get a potential market worth $4.5 trillion.
Keep in mind, this list isn’t exhaustive. For example, it doesn’t include a potentially massive infusion of revenue from government defense contracts, which I’ll talk more about in a moment. And again, this is why PwC says the AI market will be worth $15.7 trillion by 2030.
Bottom Line: xAI has endless ways to make money. But that’s not even the best part.
The best part is the third thing you need to understand about xAI…
The “First Buddy”
As you learned last week, Elon has a very powerful friend in the U.S. government:
President Trump.
Jokingly called the “First Buddy,” Elon’s now closer to President Trump than almost anyone outside of his direct family. Not only does he attend Trump’s private events and dinners, but now he’s a part of “the inner circle,” as The Washington Post confirmed.
In his Time “Person of the Year” interview, Trump said he believes Elon is one of the “only people” in the world with real credibility. It’s hard to think of a single businessman since John D. Rockefeller who was held in such high regard — and who wielded such immense power with the United States Government.
And that’s why I believe, much like Rockefeller became one of the first billionaires, it’s inevitable that Elon will keep earning huge government contracts under President Trump, and likely become one of the world’s first trillionaires.
One envious tech CEO said that Elon is “using his position to favor xAI in any way, such as awarding it government contracts.” And it’s true. With xAI, Elon is likely to get much more business from the government, particularly from the Department of Defense.
As you’ve been learning today, there’s an AI “Arms Race” taking place right now, all around the world. For example, just one quick visit to the DoD website — and you can see that it’s going all-in on AI. It even built a whole new section on its site for it.
The Department of Defense is one of the biggest line items of the U.S. budget. More than 10% of our total GDP goes towards it. And now, with Trump directing more and more resources towards AI, and with Elon becoming Trump’s trusted right-hand man, who do you think is in the best position to land all those AI contracts?
Well, if you guessed xAI, you’re using your head. That’s what I think, too.
Last week, we looked at a few of the ways Elon’s role as First Buddy could help xAI succeed. Let’s summarize them here:
1. AI Regulation and Policy Favoritism
- Musk has been highly vocal about AI safety and regulation. With his new influence, he could help shape AI policies in ways that benefit xAI, while imposing restrictions on competitors like OpenAI, Google DeepMind, and Anthropic.
- He could advocate for regulatory frameworks that favor xAI’s approach to AI safety and transparency
2. Government Contracts and Funding
- The U.S. government (including agencies like DARPA, the Department of Defense, and NASA) invests heavily in AI for defense, intelligence, and space applications. Musk’s connections could help xAI secure lucrative government contracts.
- AI models for cybersecurity, surveillance, or autonomous military decision-making could be areas of interest
3. AI and National Security Applications
- If Musk aligns xAI with U.S. national security interests, his company could gain access to classified datasets, supercomputing resources, and strategic partnerships.
- xAI could be positioned as a key player in AI-driven warfare, intelligence analysis, or space exploration.
4. AI and Big Tech Antitrust Battles
- Musk has criticized OpenAI’s ties with Microsoft and Google’s dominance in AI. With government influence, he could push for antitrust actions against these companies, potentially creating more market space for xAI.
5. Data Access and Infrastructure Support
- AI companies need vast amounts of high-quality data and computing power. If Musk influences policies on what’s called data-sharing laws, xAI might gain access to government datasets, thus boosting its AI training capabilities.
- xAI could also benefit from federal incentives for AI supercomputing infrastructure.
6. Space and AI Synergies with SpaceX
- Musk could push for AI-driven advancements in space exploration, satellite networks, and robotics, securing government backing for AI projects integrated with his SpaceX and Starlink companies.
- xAI’s models could be used for autonomous spacecraft navigation, Mars mission planning, and deep-space AI research
7. AI Safety and Public Perception
- Musk often warns about AI dangers. If he influences government messaging, he could steer public discourse toward xAI’s approach as being the safest alternative, giving it a competitive edge
Bottom line?
Musk’s political influence could help him position xAI as the leader in a massive, fast-growing sector.
That’s why, in the coming months and years, I’m projecting that xAI’s revenues — and valuation — will blast off like a rocket ship.
Elon’s Empire
With his constellation of extraordinary companies, Elon is building the leading empire globally.
And like many investors who focus on the private markets, we believe these companies will soon go public — and make Elon the world’s first trillionaire.
The thing is, Elon has a habit of taking his early investors along for the ride, and making them wealthy beyond their wildest dreams.
That’s why, for the month of April, I’m planning to do two things for Porter & Co. readers:
First, I’m planning to share all the details of the companies in Elon’s Empire, from xAI to Neuralink to SpaceX.
And secondly, I’ll be revealing how investors like you can get exposure to these extraordinary companies — before they potentially go public.
So, stay tuned for next week’s email.
In the meantime, check this new video I just released, with Porter, on the ticker symbol that lets you grab a pre-IPO stake in Elon Musk’s biggest, most ambitious project of his life.
Happy investing,
Matt Milner
P.S. As you learned today, no matter how much the odds seem stacked against him, everything Elon touches seems to turn to gold.
So, if you can’t wait to learn how to get investment exposure to Elon’s pre-IPO empire, click here.