Elon Musk’s xAI, founded last summer, has announced a significant milestone today, raising $6 billion in funding. This funding aims to bring the startup’s first products to market, build advanced infrastructure, and speed up the research and development of future technologies.
XAI has already introduced Grok, a more daring version of OpenAI’s ChatGPT, which is accessible through X (formerly known as Twitter). Currently, this chatbot is available only to X Premium subscribers.
The funding round attracted investments from multiple sources, including Andreessen Horowitz, Sequoia Capital, and Saudi Arabian Prince Al Waleed bin Talal. Last year, a Securities and Exchange Commission filing indicated that xAI aimed to raise up to $1 billion in equity investments. More recently, The Financial Times reported that the company sought up to $6 billion, a claim Musk denied at the time.
The cost of hardware necessary for AI development is notably high. Nvidia’s upcoming Blackwell B200 AI graphics cards range from $30,000 to $40,000 each. A recent report from The Information stated that xAI would need 100,000 of Nvidia’s current H100 chips for a supercomputer to support an enhanced version of its Grok AI chatbot. Musk reportedly informed investors that the plan is to launch this new data center by fall 2025.
Competing in the AI sector for chips, talent, and technology is expensive. Major tech firms have invested billions in AI startups like Anthropic. Companies like Google, Apple, Amazon, Microsoft, and Meta are also heavily investing in their AI projects.
Microsoft has formed a multi-billion-dollar partnership with OpenAI. Meanwhile, OpenAI’s CEO, Sam Altman, is reportedly seeking additional trillions to transform the global chip industry. Musk, a co-founder of OpenAI, is suing the company, alleging it has strayed from its mission to benefit humanity.
Aside from xAI and OpenAI, Musk has expressed a preference to develop AI and robotics products outside of Tesla unless he gains more control. Tesla shareholders will vote this week on whether to reinstate Musk’s $56 billion pay package ahead of its annual meeting on June 13th.
