Elon Musk’s xAI raises $6 billion to fund its race against ChatGPT and all the rest

The Verge

Elon Musk founded xAI last summer, and today it announced raising $6 billion in funding, saying it will help bring the startup’s “first products to market, build advanced infrastructure, and accelerate the research and development of future technologies.”

So far, xAI has launched Grok, a supposedly edgier version of OpenAI’s ChatGPT available via X, formerly known as Twitter, where the chatbot is currently only available to X Premium subscribers.

Funding in this round came from several sources, according to xAI, including Andreessen Horowitz, Sequoia Capital, and Saudi Arabian Prince Al Waleed bin Talal. Last year, a filing with the Securities and Exchange Commission showed that xAI was looking to raise up to $1 billion in equity investments, and a few months ago, The Financial Times reported it was seeking up to…. $6 billion. Musk denied that report at the time.

The hardware capable of powering AI development is pretty pricey, with Nvidia’s upcoming Blackwell B200 AI graphics cards costing anywhere from $30,000 to $40,000 apiece. Last week, a report from The Information said that xAI would need 100,000 of Nvidia’s current H100 chips for a supercomputer to power an upgraded version of its Grok AI chatbot. Musk reportedly told investors the plan is to launch the new data center by the fall of 2025.

Continuing on in the AI race for chips, talent, and technology won’t be cheap. Big tech firms have dumped billions into AI startups like Anthropic in addition to the resources Google, Apple, Amazon, Microsoft, and Meta are pouring into AI projects of their own.

Microsoft has also struck a multi-billion partnership with OpenAI, whose CEO Sam Altman is reportedly pursuing trillions more dollars to revamp the global chip industry. Musk, a founding member of OpenAI, is suing that company while claiming it has abandoned its mission to benefit humanity.

Outside of xAI and OpenAI, Musk said he would “prefer to build products outside of Tesla” when it comes to AI and robotics unless he gets more control. Tesla shareholders will start voting this week on whether to restore Musk’s $56 billion pay package ahead of its annual meeting on June 13th.

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