xAI, Elon Musk's AI company, has raised $6 billion, according to a filing with the US Securities and Exchange Commission on Thursday.
Investors contributed a minimum of $77,593, per filing (97 participated, but the filing does not reveal their identities). xAI later announced (confirming several earlier reports) that Andreessen Horowitz, Blackrock, Fidelity, Kingdom Holdings, Lightspeed, MGX, Morgan Stanley, OIA, QIA, Sequoia Capital, Valor Equity Partners, Vy Capital, Nvidia, AMD and others are counted among them.
The new money brings xAI's total raised to $12 billion, adding to the $6 billion tranche xAI raised this spring. CNBC reported in November that xAI was targeting a $50 billion valuation — double the valuation six months earlier.
According to the Financial Times, only investors who had backed xAI in its previous fundraising round were allowed to participate in this one. Investors who helped fund Musk's purchase of Twitter were reportedly given access to up to 25% of xAI's stock.
The rise of AI
Musk formed xAI last year. Shortly after, the company released Grok, a leading AI generative model that now powers a number of features in X, including a chatbot accessible to X Premium subscribers and free users in some regions.
Grok has what Musk has described as “a rebellious streak” — a willingness to answer “spicy questions that are rejected by most other AI systems.” Told to be vulgar, for example, Grok will happily oblige, spouting profanity and colorful language you won't hear from ChatGPT.
Musk has derided ChatGPT and other AI systems for being too “smart” and “politically correct,” despite Grok's own reluctance to cross certain boundaries and protect political subjects. He also refers to Grok as “maximally truth-seeking” and less biased than competing models, although there is evidence to suggest that Grok leans left.
Over the past year, Grok has become increasingly entrenched on X, the social network formerly known as Twitter. At the start, Grok was only available to X users – and developers skilled enough to get the “open source” edition working.
Thanks to an integration with the open Flux image generator, Grok can generate images in X (without railings, arguably). The model can also analyze images and summarize trending news and events (imperfectly, mind).
Reports indicate that Grok may handle even more X features in the future, from enhancing X's search capabilities and account bios to helping with post analytics and reply settings.
xAI is racing to catch formidable competitors like OpenAI and Anthropic in the generative AI race. The company launched an API in October, allowing customers to build Grok into third-party apps, platforms and services. And it just launched a standalone Grok iOS app for a test audience.
Musk claims it hasn't been a fair fight.
In a lawsuit filed against OpenAI and Microsoft, OpenAI's close associate, Musk's lawyers accuse OpenAI of “actively trying to eliminate competitors” like xAI by “extracting promises from investors not to fund them.” OpenAI, Musk's adviser says, also unfairly benefits from Microsoft's infrastructure and expertise in what lawyers describe as a “de facto merger.”
However, Musk often says that X's data gives xAI a leg up on rivals. Last month, X changed its privacy policy to allow third parties, including xAI, to train models on X posts.
Notably, 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 benefited from his early involvement but reneged on his nonprofit's pledge to make the fruits of its AI research available to everyone.
An xAI ecosystem
xAI has outlined a vision in which its models would be trained on data from Musk's various companies, including Tesla and SpaceX, and its models could then improve technology at those companies. It is already powering customer support features for SpaceX's Starlink Internet service, according to The Wall Street Journal, and the startup is said to be in talks with Tesla to provide R&D in exchange for some of the automaker's revenue.
Tesla shareholders, for one, oppose these plans. Some have sued Musk over his decision to start xAI, arguing that Musk has diverted talent and resources from Tesla to what is essentially a competing venture.
However, the deals — and xAI's developer and consumer-facing products — have driven xAI's revenue to about $100 million a year. By comparison, Anthropic is said to be on pace 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 is 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 its press release, xAI said it plans to fully double that number. (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 Power Authority for 150 MW of additional power—enough to power roughly 100,000 homes. To win the agency, xAI pledged to improve the quality of the city's drinking water and supply Memphis' grid with batteries made by Tesla at a discount. But some residents criticized the move, arguing it would strain the grid and worsen the area's air quality.
Tesla is also expected to use the upgraded data center to improve its autonomous driving technologies.
xAI has expanded quite rapidly from an operations standpoint in the year since its founding, growing from just a dozen employees in March 2023 to over 100 today. In October, the startup moved into OpenAI's old corporate offices in San Francisco's Mission neighborhood.
xAI has reportedly told investors it plans to raise more money next year.
It won't be the only AI lab raising endless money. Anthropic recently secured $4 billion from Amazon, bringing its total raised to $13.7 billion, while OpenAI raised $6.6 billion in October to boost its war chest to $17.9 billion.
Megadeals like OpenAI's and Anthropic's drove AI venture capital activity to $31.1 billion in over 2,000 deals in Q3 2024, according to PitchBook data.
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