Elon Musk to Build Bigger Compute, Complex AI Products with New $6 Billion xAI Funding

Elon Musk’s xAI has raised $6 billion in a recent Series C funding round. TechCrunch reported that xAI new funding brings the company’s valuation to $45 billion, about double its former valuation. The latest funding brings the total amount raised by the startup to $12 billion having raised $6 billion in May 2024.

Boosting xAI Infrastructure

With the new funding, xAI will accelerate advancement of its infrastructure and ship innovative products for millions of users. The AI startup will also use the funds to advance its mission by accelerating xAI AI research and development of future technologies and enhance its understanding of the universe.

“xAI’s most powerful model yet is currently training and we are now focused on launching innovative new consumer and enterprise products. The funds from this financing round will be used to further accelerate our advanced infrastructure, ship groundbreaking products and accelerate research and development,” xAI said in a statement.

The company plans to allocate the funding strategically to boost xAI’s infrastructure in the Memphis data center where it has 100,000 Nvidia processors. The data center plays a critical role in expanding xAI’s computational power and training AI models. By boosting its processing capabilities, the AI startup can build complex AI products and enhance current ones. This will boost its competitive advantage over OpenAI.

X and GrokAI

Tesla CEO Elon Musk founded xAI last year. The company released its generative AI Grok soon after. The model powers various features on X, including a chatbot that’s accessible to free users and premium subscribers. Grok is designed to respond to spicy queries that many other AI models reject. Musk has been on record deriding ChatGPT and other AI models for being politically correct or being woke.

Musk fueled AI ambitions by terming Grok as less biased and truth-seeking, as opposed to rival models. Over the last one year, Grok has become fully ingrained on X. The AI model uses Aurora, an image generation model to generate images on X. It’s capable of analyzing images and summarizing trending events and news.

Moving into the future, Grok will reportedly handle more functions on the social media platform. These include improving account bios, boosting search capabilities, and supporting post analytics and reply settings. Just recently, X added a Grok button to assist users in discovering relevant content and delve deeper into real-time events and trending discussions.

Playing Catchup

xAI is moving fast to catch up with generative AI rivals like Anthropic and OpenAI. In October 2024, the company unveiled an API that allows users to build its AI model into third-party applications, services and platforms. The AI startup recently rolled out a Grok iOS application to a selected audience for testing.

But the X owner argues that the generative AI race hasn’t been fair. Musk has filed a lawsuit against Sam Altman, OpenAI and its close collaborator, Microsoft. In the lawsuit, Musk accuses the ChatGPT owner of trying to eliminate competitors such as xAI by extracting investor promises not to fund them. Musk also argues that OpenAI unfairly benefits from the vast expertise and infrastructure from Microsoft.

Despite these allegations, Musk says that data from his X platform gives xAI an advantage over his rivals. Musk co-founded OpenAI with Sam Altman in 2015 and left in 2018 following disagreements over the AI startup’s direction. OpenAI has disagreed with Musk’s lawsuit, terming it baseless and misleading.

Leading investors participated in the latest Elon Musk xAI funding round. These included Blackrock, Andreessen Horowitz, Sequoia Capital, Blackrock, Fidelity, MGX, and Lightspeed. Other investors included Morgan Stanley, QIA, Valor Equity Partners, OIA, Nvidia, Vy Capital, and AMD. Only investors who had participated in the previous xAI funding round reportedly backed this round. Investors who supported Elon Must acquire Twitter got access to a maximum of 25% shares.