Elon Musk’s AI company, xAI, has raised $6 billion in its latest funding round, bringing the total amount raised to $12 billion.
The funding, disclosed in a US Securities and Exchange Commission filing, involved 97 investors, including Andreessen Horowitz, BlackRock, Fidelity, Nvidia, AMD, and Sequoia Capital, although individual contributions were not detailed.
Reports indicate that xAI is now targeting a $50 billion valuation, doubling its worth from six months ago.
The latest funding round allowed participation only from prior investors, including those who helped finance Musk’s acquisition of Twitter. Some of these investors reportedly gained access to up to 25% of xAI’s shares.
xAI’s flagship generative AI model, Grok, has been integrated into X (formerly Twitter), where it powers chatbots and image generation tools. The model is promoted as less “politically correct” than competitors like ChatGPT, although it has faced its own controversies.
Recently, xAI launched an API to enable third-party integration of Grok and introduced a standalone iOS app for select users.
Legal battles have also marked xAI’s journey, with Musk accusing OpenAI of deterring investors from funding competitors. Musk highlights X’s data policy, which now permits third-party training of AI models on posts, as a strategic advantage for xAI.
Plans are underway for xAI to leverage data from Musk’s other companies, including Tesla and SpaceX, to enhance its AI models. However, this integration has drawn criticism, with Tesla shareholders filing lawsuits alleging resource diversion to xAI.
Despite the controversies, xAI generates annual revenues of around $100 million, although it trails competitors like OpenAI, which is targeting $4 billion in revenue for 2024.
The company is also scaling its infrastructure, operating a Memphis data center powered by 100,000 Nvidia GPUs, with plans to double this capacity next year. The facility supports both xAI’s operations and Tesla’s autonomous driving research. xAI recently secured 150 MW of additional power for the center, pledging improvements to local utilities in exchange.
xAI has grown rapidly since its founding, expanding its team from 12 employees in 2023 to over 100 today. The company now occupies OpenAI’s former headquarters in San Francisco and plans further fundraising efforts in 2025 to remain competitive in the AI sector.
Rival companies like Anthropic and OpenAI have also raised substantial funds, contributing to a surge in AI venture capital activity, which reached $31.1 billion across 2,000 deals in Q3 2024.
