Elon Musk’s artificial intelligence company, xAI, has raised $6 billion in its latest funding round, according to a filing with the U.S. Securities and Exchange Commission.
Coming from 97 investors, though their identities remain undisclosed in the filing, the investment round attracted companies including Andreessen Horowitz, BlackRock, Fidelity, Kingdom Holdings, and Nvidia, among others.
xAI later confirmed that these funds have brought its total capital raised to $12 billion, following a previous $6 billion secured earlier this year. Reports reveal xAI is targeting a valuation of $50 billion, double its worth from six months ago.
xAI, founded in 2023, has been focused on integrating its flagship AI model, Grok, into various applications. Grok powers a range of features on X (formerly Twitter), including a chatbot for premium and select free users.
Known for its unconventional style, Grok is marketed as a “truth-seeking” AI with fewer biases, although it has been criticised for its limitations and occasional inaccuracies.
The model has also been embedded in other functions on X, such as image generation, news summarisation, and analytics enhancements. xAI recently launched an API allowing third-party developers to integrate Grok into their platforms and introduced a standalone app for iOS.
While xAI continues to grow, the company is working to tackle challenges from rivals and regulators. Musk’s company has accused OpenAI and its collaborator, Microsoft, of limiting competition by allegedly restricting investor opportunities and benefiting from exclusive partnerships.
Again, Tesla shareholders are having issues with Musk’s diversion of resources to xAI, even filing lawsuits against him.
Nonetheless, xAI is generating significant revenue, reportedly around $100 million annually. However, this pales in comparison to competitors like OpenAI, which is projected to earn $4 billion by the end of 2024.
Data Centre Expansion and Future Plans
xAI is scaling its operations really fast. The company built a data centre in Memphis in just four months, with 100,000 Nvidia GPUs, and has secured approval to double its capacity next year.
The Memphis facility, partly powered by diesel generators, has been commended as well as criticised. While xAI has committed to improving local infrastructure, residents are unhappy about environmental issues over the stress on resources.
Tesla is expected to utilise xAI’s upgraded infrastructure to refine its autonomous driving systems, while xAI continues to train the next generation of Grok models at the facility.
AI Industry Competition
xAI’s growth comes with competition from rival companies like Anthropic and OpenAI, which have also raised billions to bolster their operations.
Anthropic recently secured $4 billion from Amazon, while OpenAI added $6.6 billion to its reserves, bringing its total funding to nearly $18 billion.
