Elon Musk's xAI Raises $5-6 Billion, Valuation Soars to $50 Billion for AI Supercomputer Expansion

Elon Musk's xAI raising up to $6 billion to purchase 100,000 Nvidia chips for Memphis data center

Elon Musk's artificial intelligence company xAI is raising up to $6 billion at a $50 billion valuation, according to CNBC's David Faber. Sources told Faber that the funding, which should close early next week, is a combination of $5 billion expected from sovereign funds in the Middle East and $1 billion from other investors, some of whom may want to re-up their investments. The money will be used to acquire 100,000 Nvidia chips, per sources familiar with the situation. Tesla's Full Self Driving is expected to rely on the new Memphis supercomputer. Musk's AI startup, which he announced in July 2023, seeks to "understand the true nature of the universe," according to its website. Last November, X.AI released a chatbot called Grok, which the company said was modeled after "The Hitchhiker's Guide to the Galaxy." The chatbot debuted with two months of training and has real-time knowledge of the internet, the company claimed at the time. With Grok, X.AI aims to directly compete with companies including ChatGPT creator OpenAI, which Musk helped start before a conflict with co-founder Sam Altman led him to depart the project in 2018. It will also be vying with Google's Bard technology and Anthropic's Claude chatbot.

Elon Musk's xAI Seeks $6B At $50B Valuation To Acquire 100K Nvidia Chips For Memphis Data Center - Microsoft (NASDAQ:MSFT), NVIDIA (NASDAQ:NVDA)

Elon Musk's artificial intelligence venture, xAI, is reportedly in the process of raising up to $6 billion. The funds are intended for purchasing 100,000 Nvidia Corp. NVDA chips. What Happened: xAI's latest funding round is expected to close early next week, as reported by CNBC on Friday. It includes $5 billion from Middle Eastern sovereign funds and an additional $1 billion from other investors. Some of these investors may be looking to increase their stakes. This fundraising would value Musk's AI startup at $50 billion, more than doubling the $24 billion valuation in its previous round of funding in May. The chips are crucial for the new Memphis supercomputer, which will support Tesla Inc.'s TSLA Full Self-Driving (FSD) technology. Subscribe to the Benzinga Tech Trends newsletter to get all the latest tech developments delivered to your inbox. xAI, launched in July 2023, aims to "understand the true nature of the universe," according to its website. Last year, xAI introduced a chatbot named Grok, inspired by "The Hitchhiker's Guide to the Galaxy." The chatbot was designed to compete with OpenAI's ChatGPT, Google's Gemini, and Anthropic's Claude. See Also: Taylor Swift Fans Abandon Elon Musk's X For Bluesky, Says Report Why It Matters: Earlier this year, xAI raised $6 billion in its Series B funding round, catapulting its valuation to $24 billion. This positioned xAI among the world's most valuable AI startups, alongside giants like Microsoft Corp.-backed MSFT OpenAI and Anthropic. Despite this, xAI is not yet the largest AI startup in terms of valuation. The planned Memphis supercomputer, a key component of xAI's strategy, is set to enhance its AI capabilities. The project, located at a former manufacturing site, is awaiting approval from local authorities. Discussions with city officials began in March, underscoring the competitive nature of securing such high-profile projects. Check out more of Benzinga's Consumer Tech coverage by following this link. Read Next: OpenAI's 'Operator' AI Agent Will Perform Tasks Like Coding, Travel Booking And More Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors. Photo courtesy: Shutterstock Market News and Data brought to you by Benzinga APIs

Report: Elon Musk's xAI Raises $5 Billion and Doubles Valuation | PYMNTS.com

Elon Musk's artificial intelligence (AI) startup xAI reportedly raised $5 billion in a funding round, valuing the company at $50 billion. The new financing brings the total amount raised by xAI this year to $11 billion, the Wall Street Journal (WSJ) reported Wednesday (Nov. 20). The funding round also more than doubled xAI's valuation, which was gauged at $24 billion when the company raised $6 billion in the spring, according to the report. The company plans to use the new funds to add another 100,000 Nvidia chips for training its AI models, per the report. It was reported Oct. 29 that xAI aimed to raise "several billion dollars" in a funding round that would value it around $40 billion. In September, the company launched its Colossus 100k H100 training cluster, with Musk saying in a post on X that it is "the most powerful AI training system in the world. Moreover, it will double in size to 200k (50k H200s) in a few months." The H200 is an Nvidia GPU designed to accelerate generative AI and large language models. "The AI sector remains a long-term growth opportunity for VC investors despite the volatility seen in recent months," Stocklytics wrote at the time. "Although they are being more selective about which AI startups to back, the overall interest remained strong, and Crunchbase data proves this." Venture capital firm Menlo Ventures said Wednesday that enterprise spending on generative AI increased sixfold this year -- from $2.3 billion in 2023 to $13.8 billion in 2024 -- as businesses began implementing the technology after first experimenting with it. "2024 marks the year that generative AI became a mission-critical imperative for enterprise," Menlo Ventures Partner Joff Redfern said in a press release. "The numbers tell a dramatic story of organizations moving beyond pilots to embedding AI at the core of their business strategies."

Elon Musk's xAI reportedly raising multibillion-dollar funding round to upgrade its supercomputer - SiliconANGLE

Elon Musk's xAI reportedly raising multibillion-dollar funding round to upgrade its supercomputer Elon Musk's xAI Corp. is reportedly raising a multibillion-dollar funding round that will significantly increase its valuation. According to CNBC, the investment is worth up to $6 billion and should close early next week. The bulk of the capital, $5 billion, will reportedly be provided by sovereign funds in the Middle East while the rest is set to come from other investors. The deal is expected value xAI at $50 billion. The Financial Times, in turn, reported that the artificial intelligence developer has already raised $5 billion through the fundraising effort. The paper cited its sources as saying that xAI is now worth $45 billion. That's lower than the valuation cited by CNBC, but still $21 billion higher than what the company was worth after its previous funding round in May. Musk launched xAI last year to compete with OpenAI in the large language model model. The company debuted its first LLM, Grok, last November. It has since released the LLM under an open-source license and introduced several newer, proprietary models with more advanced capabilities. To support its AI development efforts, xAI has built a supercomputer in Memphis that features 100,000 of Nvidia Corp.'s H100 graphics cards. The system, which is known as Colossus, came online in September. CNBC reported that xAI will likely use its latest funding round to deploy 100,000 more GPUs in its Memphis data center. The supercomputer upgrade is not unexpected. Last month, Musk announced plans to expand Colossus with 100,000 more chips "soon." Half of the new chips are expected to be H200s, which are more advanced than the H100 GPUs that currently power Colossus. The H200 features 80% more memory than its predecessor along with 40% higher memory bandwidth. The latter improvement means that data can more quickly move between the GPU's logic circuits and onboard RAM. Because AI models move data to and from memory more frequently than other workloads, the increased bandwidth can significantly boost LLM performance. It's possible that xAI will also use its new funding to buy other equipment from Nvidia. Alongside H100 graphics cards, Colossus includes the chipmaker's SN5600 Ethernet switches. The supercomputer also uses an Nvidia processor known as the BlueField-3 to perform certain infrastructure management tasks. According to CNBC's sources, the upgraded supercomputer will help power Tesla Inc.'s Full Self Driving software. It's a suite of partly autonomous driving features that the automaker ships with some of its vehicles. A car equipped with Full Self Driving can automatically switch lanes, park, stop at red lights and perform related tasks. The upgraded supercomputer will presumably also support xAI's own AI development efforts. The company's latest LLM, grok-beta, debuted earlier this month. It can process prompts with up to 128,000 tokens and interact with other applications. The additional computing capacity that the planned Colossus expansion will provide should enable xAI to build LLMs with more advanced capabilities. The hardware upgrade comes as OpenAI is reportedly also working to expand its AI development infrastructure. According to The Information, the ChatGPT developer and Microsoft Corp. are currently in the third stage of a five-phase supercomputer construction project. The initiative is expected to see the companies build a system with millions of AI processors by 2028.

Elon Musk's xAI Now Valued at $50 Billion Following Fresh Capital Injection - Decrypt

Grok developer xAI has raised $5 billion in new funding, bringing its valuation to $50 billion, according to a report by the Wall Street Journal. The latest funding round, which was first announced on Friday, adds to the billions raised in May. Valor Equity Partners, Sequoia Capital, and Andreessen Horowitz were reportedly part of the raise, while Qatar's sovereign wealth fund also participated, per the report, which cited unnamed sources. Those same investment firms had previously lavished $6 billion on xAI, allowing it to continue on its "steep trajectory of progress," the company announced back in May. According to xAI, other firms who have invested in the AI developer include Vy Capital, Fidelity Management & Research Company, Prince Alwaleed Bin Talal, and Kingdom Holding. Joining Google, Microsoft, Meta, OpenAI, and Anthropic amid a booming AI industry, xAI is part of a cohort developing consumer-facing artificial intelligence. Tens of billions of dollars are being spent on the nascent tech, with a further $632 billion expected to be doled out by 2028, according to an August report by market intelligence firm International Data Corporation. As part of that drive, Tesla and xAI CEO Elon Musk expanded his search for investors within the Middle East in October, including Saudi Arabia. At the time, xAI was valued at $45 billion. Musk and xAI, that same month, tapped computer chip manufacturer Nvidia to use its Spectrum-X networking technology to expand its work on the xAI's Colossus supercomputer. Musk founded xAI in July 2023 to develop an AI to rival his former company, OpenAI, and its flagship chatbot, ChatGPT. When it launched last year, the OpenAI rival announced it had raised $134 million in funding, bringing its initial funds to $1 billion. Last fall, xAI unveiled its answer to ChatGPT, Grok, which was integrated into X (formerly Twitter) for Premium subscribers. Grok, however, was rushed, a fact acknowledged by xAI. Despite these early stumblings, Grok continues to evolve. In August, Grok 2 launched, which featured image generation, and according to Elon Musk, the next version of Grok is expected to launch in December.