Elon Musk’s company xAI raised $6 billion in a Series C financing round.
According to the mentioned firm, Andreessen Horowitz, Blackrock, Fidelity, Lightspeed, MGX, Morgan Stanley, OIA, QIA, Sequoia Capital, Valor Equity Partners, Vy Capital, Nvidia, AMD, and others participated in the specified process.
It is also known that the Saudi conglomerate Kingdom Holdings has invested about $400 million in Elon Musk’s company as part of a Series C financing round.
Currently, xAI’s market capitalization is at $45 billion. This figure is almost twice as high as the previous valuation of the firm.
After the completion of the last round of financing, the total amount of investments raised by xAI reached $12 billion. It is worth mentioning that the company received $6 billion in May.
According to information published by the media, only those investors who backed xAI in the previous fundraising round were allowed to participate in the new round. The journalists also reported that the investors who helped Elon Musk finance the Twitter acquisition deal had access to 25% of the mentioned company’s shares.
A statement released by xAI notes that the firm’s most powerful artificial intelligence model is currently undergoing the training process. The brand also stated its focus on launching innovative new consumer and enterprise products. The company reported that the money received during the latest round of funding will be used to further accelerate its advanced infrastructure, research, and development. Besides, xAI will direct part of these funds to ship groundbreaking products.
Elon Musk founded xAI last year. Shortly after, the company launched its flagship generative artificial intelligence model called Grok. This AI model powers several features on the social media platform X, formerly known as Twitter. Grok, among other things, powers a chatbot available to X Premium subscribers and free users in some regions.
Elon Musk stated that the mentioned model of artificial intelligence has what he described as a rebellious streak. In this case, it implies a willingness to answer spicy questions that are rejected by most other machine intelligence systems. For example, at the request of a user, Grok can become a vulgar virtual interlocutor who will actively use appropriate vocabulary, including emotional verbal constructions. ChatGPT from OpenAI would not fulfill the corresponding consumer request, trying to avoid rudeness in communication. Elon Musk derided this chatbot and other similar digital products for being too woke and politically correct. It is worth noting that at the same time, Grok still adheres to the boundaries of what is permissible in communicating with users and avoids hedging on political subjects. Elon Musk called this artificial intelligence system as truth-seeking as possible and less biased compared to competitors. At the same time, some experts talk about Grok’s penchant for leftist political ideas.
Over the past year, there has been a process of intensive integration of the mentioned artificial intelligence model into the virtual infrastructure of X. At the time of launch, Grok was available only to users of the specified digital platform and developers skilled enough to get the open source edition up and running. As a result of integration with xAI’s in-house image generation model, Aurora, Grok can generate images on X. It is worth noting that the corresponding process is carried out without guardrails, which is a reason for discussion. Moreover, Grok can analyze images and summarize news and trending events, however imperfectly. It is expected that in the future this model of artificial intelligence will be able to handle even more X functions. In this case, it means expanding the practice of using Grok to solve tasks such as enhancing X’s search capabilities and account bios to help with post analytics and reply settings.
In the current month, a Grok button was launched on the mentioned social media platform. This functional solution is designed to help users discover relevant context and dive deeper into trending discussions and events in real-time.
In the so-called generative artificial intelligence race, Elon Musk’s company is striving to catch up with competitors such as OpenAI and Anthropic. It is worth noting that the AI industry has recently seen increased competition. In October, xAI launched an API allowing customers to build Grok into third-party apps, platforms, and services. Also this month, the company rolled out a standalone Grok iOS app to a test audience.
Elon Musk accuses OpenAI and Microsoft of unfair competition. His lawyers claim that these companies are actively trying to eliminate competitors such as xAI by extracting promises from investors not to fund them. Elon Musk’s counsel also stated that OpenAI unfairly benefits from Microsoft’s infrastructure in a process that has been called a de facto merger.
At the same time, Mr. Musk periodically claims that xAI has such an advantage over competitors as X’s data. Last month, the social media platform amended its privacy policy to allow third parties, including the developer of Grok, to train artificial intelligence models on X posts.
It is worth noting that Elon Musk is one of the original founders of OpenAI. He left the company in 2018 due to disagreements over its direction. According to Elon Musk, OpenAI profited from his early involvement. He also stated that the company reneged on its nonprofit pledge to make the results of its research in the area of artificial intelligence accessible to all.
OpenAI does not agree with the accusations from Elon Musk, characterizing his statements as misleading, baseless, and a case of sour grapes.
The xAI concept stipulates that its artificial intelligence models will be trained based on data arrays from various companies of Mr. Musk, including Tesla and SpaceX. Also, in this case, a kind of reverse effect principle is used. The corresponding wording implies that AI models will be able to improve technology in Elon Musk’s companies. According to information released by the media, xAI is already powering support to customers of SpaceX’s Starlink internet service. The journalists also reported that the company is negotiating with Tesla to provide research and development in exchange for a portion of the automaker’s revenue. It is worth noting that Tesla shareholders reacted negatively to the relevant plans. Some of them even sued Elon Musk for the decision to found xAI. According to these shareholders, Mr. Musk diverted talents and resources from Tesla to what’s essentially a competing venture.
At the same time, the mentioned deals have already become a factor of beneficial impact on xAI’s financial performance. The company’s revenue reached approximately $100 million per year. For comparison, a similar figure for Anthropic is expected to reach $1 billion this year. OpenAI predicts that its revenue will increase to $4 billion by the end of 2024.
In the summer, Elon Musk announced that xAI is training the next generation of Grok family artificial intelligence models at its data center in Memphis, which, according to preliminary data, was built in just 122 days and is currently partially powered by portable diesel generators. The company intends to upgrade the server farm, which consists of 100,000 Nvidia graphics processing units, next year. Also, xAI plans to double the number of GPUs, which are the preferred chips for training and running artificial intelligence models due to their ability to perform many calculations in parallel.
Last month, xAI won approval from the regional power authority in Memphis for 150MW of additional power. The company pledged to improve the quality of the city’s drinking water and provide the Memphis grid with discounted Tesla-manufactured batteries.
Tesla is also expected to use the upgraded data center to improve its autonomous driving technology.
In terms of operations, xAI has expanded rapidly since its founding. In March last year, the number of employees of the company was a dozen people. Currently, xAI has more than 100 employees.
Also, according to information released by the media, the company informed investors about its plans to raise more money next year. It is worth noting that other players in the artificial intelligence industry also receive significant amounts of funding. For example, Anthropic secured $4 billion from Amazon last month. The total amount of funding raised by this artificial intelligence industry player has reached the $13.7 billion mark. OpenAI received investments worth $6.6 billion in October. This company has increased its so-called war chest to $17.9 billion. The PitchBook data shows that megadeals like those concluded by OpenAI and Anthropic contributed to the volume of venture capital in the artificial intelligence industry reaching $31.1 billion in the third quarter of the current year. This figure is the result of more than 2,000 deals. The volume of venture capital in the artificial intelligence industry will likely continue to increase, as this segment of the global technology sector continues to evolve actively.
As we have reported earlier, AI Startup Basis Raises $34 Million.
