Elon Musk's xAI Powers Up with $6 Billion Funding Boost

Elon Musk's AI company, xAI, has secured $6 billion in fresh funding, propelling the generative AI contender further into the race against established players like OpenAI and Anthropic, according to a report by TechCrunch. The investment, revealed in a US Securities and Exchange Commission filing, involved at least 97 participants. While the document doesn't disclose investor identities, xAI later confirmed that Andreessen Horowitz, Blackrock, Fidelity, Kingdom Holdings, Lightspeed, MGX, Morgan Stanley, OIA, QIA, Sequoia Capital, Valor Equity Partners, Vy Capital, Nvidia, AMD, and others participated.

This latest round brings xAI's total funding to $12 billion, building on the $6 billion raised earlier this year. CNBC reported in November that xAI is aiming for a $50 billion valuation, representing a substantial jump from its valuation six months prior. According to the Financial Times, this latest funding round was restricted to existing investors in xAI's previous fundraising round. Investors who backed Musk's acquisition of Twitter were reportedly granted access to up to 25% of xAI's shares.

xAI, founded by Musk in 2022, has already launched Grok, its flagship generative AI model, which powers various features on X (formerly Twitter), including a chatbot accessible to premium subscribers and, in some regions, free users. Musk has characterized Grok as having a "rebellious streak," displaying a willingness to engage with "spicy questions" that other AI systems might avoid. In contrast to more politically correct models like ChatGPT, Grok can be prompted to use profanities and colorful language.

Grok has become increasingly integrated into X, initially being available only to platform users and developers. Its integration with the open image generator Flux enables Grok to generate images on X, albeit without content moderation. The model also possesses image analysis capabilities and can summarize news and trending events.

xAI is rapidly expanding its operations, having grown from a dozen employees in March 2023 to over 100 today. The company recently moved into OpenAI's former San Francisco offices and is reportedly planning another fundraising round next year. xAI's revenue is estimated at around $100 million annually, while competitors like Anthropic and OpenAI are generating significantly higher revenue streams.

Musk's xAI is also engaged in a legal battle against OpenAI and Microsoft, alleging that OpenAI actively sought to eliminate competitors by discouraging investors from funding rival AI companies. Musk's attorneys claim that OpenAI unfairly benefits from its close ties to Microsoft, characterizing their relationship as a "de facto merger." Musk, a co-founder of OpenAI, departed the company in 2018 over disagreements regarding its direction and its purported nonprofit status.

Despite the legal challenges and competition, xAI is actively developing its technology and expanding its reach. The company's models are being trained on data from various Musk-owned companies, including Tesla and SpaceX, with the potential to enhance technological capabilities across these ventures.

However, these plans have also drawn criticism from some Tesla shareholders who argue that Musk is diverting resources and talent from Tesla to a competing venture.