Musk’s xAI Nears $18B Valuation

Elon Musk founded the artificial intelligence startup xAI, which Bloomberg reported is close to finishing a funding round that would value the business at $18 billion

This funding might help the billionaire’s effort gain traction against upstart rivals like OpenAI and Anthropic, as well as compete with Big Tech behemoths like Meta, Microsoft, and Google.

Bloomberg reported that Musk’s X.AI Corp. could finish its newest investment round as early as this week, citing people familiar with the situation.

Details such as timing, value, and the deal amount remain unknown, according to the unnamed sources, who added that the round is still being discussed.

Previous reports from Bloomberg and other outlets such as TechCrunch and The Information say Musk’s AI business is financing $6 billion at a valuation of roughly $18 billion, up from reports of a deal of around $3 billion at a $15 billion pre-money valuation due to strong investor interest.

Sequoia Capital, a Silicon Valley titan with a long history of backing Musk’s projects, including PayPal precursor X.com, tunneling business The Boring Company, rocket venture SpaceX, and the billionaire’s efforts to take over Twitter, now X, in 2022, is said to be among those who participated in the round.

Investors are convinced of Musk’s track record at Tesla and SpaceX and the company’s ties to Musk’s social media platform X, which provides data for training huge language models that back products such as the Grok chatbot.

Musk introduced xAI about a year ago, aiming to ” understand the true nature of the universe.” The billionaire intends to develop a company to compete with industry giants like Google’s DeepMind and ChatGPT maker OpenAI.

Musk was a cofounder and early funder of OpenAI before leaving the business, supposedly due to a failed takeover effort, conflicts of interest, and now public feuds with CEO and fellow cofounder Sam Altman.

Musk has chastised the firm and Altman for prioritizing profit over AI safety, even going so far as to sue OpenAI for allegedly abandoning their original purpose of establishing an open-source artificial general intelligence that would “benefit humanity” in favor of generating profits.

In November, xAI debuted Grok, a rebellious and mischievous alternative to ChatGPT (jokingly nicknamed “TruthGPT”). The money will assist in expediting efforts to bring Grok up to the level of AI leaders such as OpenAI’s GPT, Meta’s Llama, Anthropic’s Claude, and Google’s Gemini.

Musk is valued at approximately $194.7 billion. He is the world’s third wealthiest individual, behind LVMH’s Bernard Arnault and Amazon’s Jeff Bezos.

Much of Musk’s riches and power stem from the firms he cofounded and runs, including Tesla and SpaceX, and the social network company X, which he controversially acquired in 2022 and aims to transform into an “everything app” to compete with China’s WeChat.