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x^{2}+2xx^{-1}+\left(x^{-1}\right)^{2}
Use binomial theorem \left(a+b\right)^{2}=a^{2}+2ab+b^{2} to expand \left(x+x^{-1}\right)^{2}.
x^{2}+2+\left(x^{-1}\right)^{2}
Multiply x and x^{-1} to get 1.
x^{2}+2+x^{-2}
To raise a power to another power, multiply the exponents. Multiply -1 and 2 to get -2.
x^{2}+2xx^{-1}+\left(x^{-1}\right)^{2}
Use binomial theorem \left(a+b\right)^{2}=a^{2}+2ab+b^{2} to expand \left(x+x^{-1}\right)^{2}.
x^{2}+2+\left(x^{-1}\right)^{2}
Multiply x and x^{-1} to get 1.
x^{2}+2+x^{-2}
To raise a power to another power, multiply the exponents. Multiply -1 and 2 to get -2.