Cathie Wood’s ARK invests $60 million in Elon Musk’s startup AI company xAI as part of their efforts to invest more in AI.
A massive statement from ARK Invest, which Cathie Wood manages, appears to validate the firm’s bullish stance on artificial intelligence. This follows the firm’s $60 million investment in xAI, an AI startup founded by Elon Musk.
Although strategic for ARK Invest, the investment indicates a larger pattern of rising capital inflows into AI technologies. This demonstrates a growing optimism regarding the transformative potential of AI in the future.
It is noteworthy that ARK Invest has gained significant recognition for its innovative approach to investment strategies. Therefore, the company’s May 28 announcement that it has acquired a stake in xAI is hardly unexpected.
As per the estimation provided by ARK’s Chief Futurist Brett Winton, the proportion of funds allocated to xAI investments is around 2%. Winton also highlighted the distinctive benefits that xAI offers, thereby justifying the investment as a worthwhile endeavor. His partial declaration reads:
“xAI’s access to X’s distribution and real-time data differentiates it from any other AI play, particularly when combined with Elon Musk’s maniacal focus on velocity.”
AI Is Considered Huge Potential by ARK Invest
As stated, ARK Invest has been undertaking AI-related initiatives, with xAI being the most recent. It disclosed recently that a substantial 4% of its total holdings are invested in OpenAI, the well-known developer of ChatGPT. In addition, 5% of the firm’s holdings are invested in Anthropic, the company that created the Claude AI model.
Winton may have explained in his most recent remarks why the organization is so eager to adopt AI technologies. Winton asserts that AI foundation models possess substantial potential for generating enduring value. Therefore, their value is anticipated to increase to “trillions of dollars by the conclusion of this decade.”
Launched in March 2023, Elon Musk’s xAI is the most recent venture in the competitive AI industry. To contend with well-established industry behemoths such as OpenAI, Google, and Microsoft, the startup intends to exploit its extensive integration with X (previously referred to as Twitter). This allows the company to gain a competitive edge in the AI market by implementing AI-curated audiences, empowering advertisers to delineate target demographics more precisely.
Additional Strategies for xAI
Elon Musk, meanwhile, has grandiose intentions for xAI. His statement alludes to the imminent opening of a novel data center, anticipated to occur in the autumn of 2025. You are assigning the “Gigafactory of Compute” the task of developing and instructing the subsequent iteration of the Grok AI system, which will further xAI’s market dominance in the AI industry.
A Series B funding round in which xAI recently concluded raised $6 billion, as previously reported by Coinspeaker. Prominent investors, including Andreessen Horowitz, Sequoia Capital, and Fidelity Management & Research Company, contributed to the round.
In addition, that funding round was sufficient to increase the valuation of xAI to around $24 billion, which is an impressive achievement given that the startup has only existed for about a year.
