Elon Musk’s startup xAI has announced a massive $6 billion funding round. This financing comes less than a year after xAI’s debut last July and represents Musk’s aggressive efforts to compete head-to-head with rivals like OpenAI, Microsoft, and Alphabet’s AI initiatives.
The staggering $6 billion Series B funding had an impressive roster of backers that believed in xAI’s vision, including Valor Equity Partners, Vy Capital, Andreessen Horowitz, Sequoia Capital, Fidelity, and Saudi Arabian investors Prince Alwaleed Bin Talal and Kingdom Holding. As Musk wrote in a blog post:
“xAI plans to deploy the funds from the new financing round to take its first set of products to market, build advanced infrastructure and accelerate the research and development of future technologies.”
This raise confirms earlier reports from April that xAI was seeking $6 billion at a pre-money valuation of $18 billion. Musk noted on X, formerly Twitter, “Pre-money valuation was $18B.”
Other notable backers have close ties to Musk, such as Ken Howery, a co-founder of PayPal and Founders Fund. The company claims its mission is to develop “truthful” AI systems, contrasting with concerns around hallucinations and potential misinformation from other AI chatbots like Grok’s news summary on X.
Musk has been a pioneering force in AI for years. As the CEO of Tesla, he oversees its self-driving technologies that make it the top EV company utilizing AI. However, his relationship with OpenAI, which he co-founded in 2015 and invested millions into, soured over disagreements about its direction under CEO Sam Altman.
In March, Musk sued OpenAI and Altman, accusing them of “betraying its mission statement and becoming a closed-source de facto subsidiary of Microsoft.” He has also criticized Google, alleging “coding bias into its AI products.”
After parting ways with OpenAI in 2018, Musk formed xAI and last November released its ChatGPT rival chatbot called Grok 1.0. The improved Grok 1.5 model followed in April, allowing Premium and Premium+ subscribers on Musk’s X platform to access the chatbot. As xAI touted, “There will be more to announce in the coming weeks.”
Benchmarks shared by xAI show Grok-1 outperformed models like Llama-2 and GPT-3.5 but still lagged behind Anthropic’s Claude, OpenAI’s GPT-4, Google’s Gemini, and Meta’s Llama 3. However, xAI aims to rapidly advance Grok’s capabilities with its new influx of funding.
The Verge reported that developing hardware powerful enough to run cutting-edge AI models is incredibly costly, with xAI needing a staggering 100,000 of Nvidia’s $30,000-$40,000 H100 chips for an upgraded Grok supercomputer data center targeted for fall 2025.
This funding round accelerates the fierce AI race as big tech companies invest billions into AI startups and their own projects. Microsoft has a multi-billion partnership with OpenAI, whose CEO Sam Altman reportedly seeks trillions more to transform the global chip industry.
Meanwhile, Amazon backed AI company Anthropic with $4 billion, showcasing the immense capital required to remain competitive. Musk’s xAI must use its $6 billion strategically to establish strong market footing.
Despite his focus on xAI, Tesla under Musk will continue hiring AI engineers for self-driving vehicles. However, Musk previously expressed a preference for not internalizing most AI capabilities at Tesla to allow more operational flexibility.
As he stated, “breaking free from the traditional constraints of auto manufacturing” is part of his broader vision for the future of technology and innovation.
On the corporate governance front, Tesla shareholders will soon vote on June 13th whether to reinstate Musk’s historic $56 billion compensation package. This development highlights Musk’s pivotal influence across major tech sectors like automotive, AI, and social media.
From co-founding OpenAI and pioneering self-driving AI at Tesla to now spearheading xAI’s bold $6 billion push, Musk has long shaped AI’s trajectory. As xAI accelerates its efforts with this massive funding, the race between Musk’s upstart and established giants like OpenAI, Google, and Microsoft is heating up.
Whichever breakthroughs ultimately emerge from this fervent competition, Musk’s xAI venture is cementing its place in the annals of AI’s rapid technological evolution. The road ahead promises exciting developments as these forces reignite the pursuit of “truthful” and beneficial AI systems to uplift humanity.
Copyright©dhaka.ai
tags: Artificial Intelligence, Ai, Dhaka Ai, Ai In Bangladesh, Ai In Dhaka, Google, Claude, Future of AI, OpenAI, XAi
