Elon Musk’s artificial intelligence startup xAI is reportedly in talks for a funding round that would value the company at $40 billion.
The company, founded by the Tesla and SpaceX mogul last year, was last valued at $24 billion just five months ago after a $6 billion funding round — which was more than double the initial target set by Musk’s team.
Musk is seeking to raise several billion dollars in this latest funding round for xAI, a source familiar with the matter told The Wall Street Journal.
The talks are still in the early stages.
Any cash raised would be added to the company’s $40 billion valuation.
Musk did not respond to a request for comment.
Silicon Valley’s AI startups have been raising billions of dollars to fund their costly technological advancements – and try to gain a lead in the AI race.
Earlier this month, ChatGPT-maker OpenAI raised $6.6 billion at a $157 billion valuation — making it one of the largest private funding rounds in US history.
AI startup Perplexity is in talks to raise funding that would more than double its valuation to $8 billion, according to the Journal.
Mainstream tech giants like Google parent Alphabet and Mark Zuckerberg’s Meta have been betting big on artificial intelligence and funneling their profits into new projects, like Alphabet’s Gemini bot.
Meta is reportedly working on its own AI-powered search engine, according to The Information.
“If you’re training a frontier model, you need a massive amount of compute,” Musk said on Tuesday during a video conference.
Musk – the world’s richest person with a net worth of $269.3 billion, according to Forbes – has long been involved in artificial intelligence.
He co-founded OpenAI in 2015 and left the company in 2018.
When OpenAI saw sky-high success with its ChatGPT chatbot, Musk created xAI and has since been trying to take the lead in the tech race.
He has sued OpenAI twice this year, alleging he was manipulated to believe the company – into which he invested tens of millions of dollars – was a nonprofit.
Meanwhile, xAI has built what it claims is the world’s largest data center in Memphis, Tenn.
The startup is training new versions of its AI chatbot, Grok, which is currently only available on Musk’s social media platform X, formerly known as Twitter.
xAI has plans to double the data center from 100,000 graphic processing units, or GPUs, to 200,000, Musk said on Monday.
Nvidia CEO Jensen Huang has praised xAI’s massive data center, calling it “easily the fastest supercomputer on the planet.”
But Musk’s startup – which released its chatbot just four months after the company launched – is still chasing OpenAI and Google, which have years on xAI.
And it seemed the company’s sole revenue stream was the X Premium subscription, which includes Grok.
It is unclear how lucrative the premium subscription is for xAI.
As of last spring, the platform had 640,000 X Premium subscribers out of more than 400 million active monthly users, according to Statista.
Last week, xAI released a tool that developers can use to build applications with Grok, adding another source of revenue.
Musk has been dipping into his other companies’ resources to help the company along.
xAI hired some employees from Tesla and Musk has diverted thousands of Nvidia GPUs from the EV maker to the AI startup.
The AI startup has discussed a deal in which it would receive some Tesla revenue for allowing the company access to its technology, according to the Journal.
On a Tesla earnings call last week, Musk said xAI “has been helpful to Tesla AI quite a few times in terms of things like scaling up.”
Tesla shareholders have sued Musk to put an end to the shared resources.
