Elon Musk's AI startup xAI seeks major funding, $40bln valuation

Elon Musk’s AI startup, xAI, is in talks with investors for a new funding round aiming to raise billions and potentially valuing the company at around $40 billion, according to a report from The Wall Street Journal. Discussions are still in preliminary stages, meaning the terms could evolve, or the talks may not lead to a finalized deal.

xAI previously raised $6 billion in a May Series B funding round, securing a post-money valuation of $24 billion with backing from prominent investors including Andreessen Horowitz and Sequoia Capital. Founded by Musk in July 2023, xAI was launched as a competitor to OpenAI’s ChatGPT. Earlier this year, xAI announced plans to make its AI model, “Grok,” open-source, following a strategy similar to Meta and the French AI company, Mistral.

This funding news comes amid a surge of interest in the AI sector, where companies like Microsoft-backed OpenAI and Google lead investments and development in generative AI technologies. OpenAI recently raised $6.6 billion, potentially boosting its valuation to $157 billion, underscoring the competitive and rapidly evolving AI landscape. Musk has not yet commented on the latest funding round discussions.