Updated December 25, 12:21 p.m. Pacific: Added details on xAI’s valuation and Kingdom Holdings’ contribution.
xAI, Elon Musk’s AI company, has raised $6 billion in a Series C funding round.
The company announced this week in which Andreessen Horowitz, Blackrock, Fidelity, Lightspeed, MGX, Morgan Stanley, OIA, QIA, Sequoia Capital, Valor Equity Partners, Vy Capital, Nvidia, AMD and others participated.
Kingdom Holdings, the Saudi company conglomerate holding company, invested about $400 million in the round, according to a public repository. The filing also revealed that xAI is now valued at $45 billion, nearly double its previous valuation.
This new liquidity brings the total raised by xAI to $12 billion, adding to the $6 billion tranche raised by xAI in May.
According to According to the Financial Times, only investors who had supported xAI in its previous fundraising were allowed to participate in this one. It appears that investors who helped finance Musk’s acquisition of Twitter received access up to 25% of xAI shares.
“xAI’s most powerful model to date… is currently in training and we are now focused on launching innovative new products for consumers and businesses,” xAI said in a statement. “Funds from this funding round will be used to further accelerate our advanced infrastructure, ship game-changing products…and accelerate…research and development.” »
Strengthen AI
Musk formed xAI last year. Shortly after, the company launched Grok, a flagship generative AI model that now powers a number of features on X, including a chatbot available to X Premium subscribers and free users in certain regions.
Grok has what Musk described as “a rebellious side” – a willingness to answer “spicy questions that are rejected by most other AI systems.” For example, said to be vulgar, Grok will happily oblige, spewing profanities and colorful language you won’t hear from ChatGPT.
Musk has ridiculed ChatGPT and other AI systems because they are too ‘woke’ and ‘politically correct’, despite Grok’s words refusal to cross certain borders And hedge on political subjects. He also called Grok “truth-seeking” and less biased than competing models, although there are evidence to suggest that Grok leans left.
Over the past year, Grok has become increasingly entrenched in X, the social network formerly known as Twitter. At launch, Grok was only available for X users – and developers qualified enough for the “open source” edition to be operational.
Through an integration with xAI’s internal image generation model, Aurora, Grok can generate images on X (without guardrails, controversially). The model can also analyze images and summarize trending news and events. imperfectlyspirit.
Reports indicate that Grok could support even more X features in the future, ranging from improving search capabilities and X account bios to helping with post analytics and reply settings. Recently,
xAI is working to catch up with formidable competitors like OpenAI and Anthropic in the generative AI race. The company launched an API in October, allowing customers to integrate Grok into third-party apps, platforms and services. And it just rolled out a standalone Grok iOS app to a test audience.
Musk says the fight wasn’t fair.
In a lawsuit filed against OpenAI and OpenAI’s close associate Microsoft, Musk’s lawyers accuse OpenAI of “actively attempting to eliminate competitors” like xAI by “extorting promises from investors.” not finance them.” According to Musk’s lawyer, OpenAI also unfairly benefits from Microsoft’s infrastructure and expertise in what the lawyers describe as a “de facto merger.”
Still, Musk often says that X’s data gives xAI an advantage over its competitors. Last month, X changed its privacy policy to allow third parties, including xAI, to train models on X posts.
It’s worth noting that Musk was one of the original founders of OpenAI and left the company in 2018 after disagreements over its direction. He has argued in previous lawsuits that OpenAI profited from his early involvement while reneging on its nonprofit commitment to making the fruits of its AI research available to everyone.
Unsurprisingly, OpenAI disagrees with Musk’s interpretation of events. In a mid-December press release, the company called Musk’s lawsuit misleading, baseless and sour grapes.
An xAI ecosystem
xAI presented a vision where its models would be trained on data from Musk’s various companies, including Tesla and SpaceX, and the models could then improve technology at those companies. xAI already provides customer support for SpaceX’s Starlink internet service, according to the Wall Street Journal, and the startup is said be in talks with Tesla to provide R&D in exchange for a portion of the automaker’s revenues.
Tesla shareholders, for example, oppose these plans. Many sued Musk over his decision to launch xAI, arguing that Musk had diverted both talent and resources from Tesla to what is essentially a competing company.
Nonetheless, the deals – along with products for xAI developers and consumers – brought xAI’s revenue to around $100 million per year. For comparison, Anthropic is would have on track to generate $1 billion in revenue this year, and OpenAI is targeting $4 billion by the end of 2024.
Musk said this summer that xAI was training the next generation of Grok models at its Memphis data center, which was apparently built in just 122 days and is currently powered in part by portable diesel generators. The company hopes to upgrade the server farm, which contains 100,000 Nvidia GPUs, next year; in a press release, xAI announced plans to double this figure. (Because of their ability to perform many calculations in parallel, GPUs are the preferred chips for training and running models.)
In November, xAI won approval from the Memphis Regional Electric Authority for 150 MW of additional power, enough to power about 100,000 homes. To convince the agency, xAI pledged to improve the quality of the city’s drinking water and supply the Memphis grid with batteries made by Tesla at a discount. But some residents criticized the move, arguing it would put strain on the network and worse the air quality of the region.
Tesla is also expected to use the upgraded data center to improve its autonomous driving technologies.
xAI has grown quite quickly from an operational standpoint in the year since its founding, growing from around a dozen employees in March 2023 to more than 100 Today. In October, the startup moved into OpenAI’s former offices in San Francisco’s Mission District.
xAI reportedly told investors it plans to raise more money next year.
It won’t be the only AI lab to raise huge amounts of cash. Anthropic recently secured $4 billion from Amazon, bringing the total raised to $13.7 billion, while OpenAI raised $6.6 billion in October to take its war chest to $17.9 billion. dollars.
Megadeals like those of OpenAI and Anthropic brought AI venture capital activity to $31.1 billion across more than 2,000 deals in Q3 2024, by PitchBook data.
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