Elon Musk’s xAI chases $40bn valuation in funding round

Elon Musk’s AI start-up xAI is in talks with investors for a funding round that would value the artificial intelligence company at about $40 billion.
The start-up hopes to raise several billion dollars in the new funding round although the discussions are in early stages, which means that terms could change or the talks could fall apart, according to the Wall Street Journal.
Musk, 53, did not immediately respond to a request for comment.
Musk’s xAI raised $6 billion in series B funding in May, reaching a post-money valuation of $24 billion, backed by investors that included Andreessen Horowitz and Sequoia Capital. The billionaire entrepreneur launched xAI in July last year as an alternative to OpenAI’s ChatGPT.
He co-founded OpenAI in 2015, but stepped down from the company’s board three years later. In August he filed a lawsuit against OpenAI and its chief executive Sam Altman, accusing the firm of putting profits and commercial interests ahead of the public good. OpenAI has denied the claims.
In March, xAI said it would open-source Grok, its ChatGPT challenger, giving the public free access to experiment with the code behind the technology, aligning xAI with firms such as Meta Platforms and France’s Mistral, which also have open-source AI models.
• Elon Musk’s AI start-up says new chatbot is just as good as ChatGPT
Grok has been updated to feature image-understanding capabilities, xAI has claimed. The tool means paid users on Musk’s social media platform, X, can upload an image and ask the chatbot questions about it. The AI technology can also understand the meaning of a joke, according to Musk.
Writing on X he said: “This is an early version. It will rapidly improve.”
Companies such as the Microsoft-backed OpenAI and Alphabet’s Google are among those leading the fierce multibillion-dollar race for generative AI dominance, driving significant investments and innovation in the rapidly evolving landscape.
Earlier in October, OpenAI raised $6.6 billion in funding from investors, which could value the company at $157 billion and cement its position as one of the most valuable private companies in the world.
As well as xAI, Musk is also chief executive of Tesla, the electric car maker, which is the world’s most valuable vehicle manufacturer at about $831 billion compared with General Motors on $57 billion and Ford Motor at $44 billion.
He also heads X, the social media platform formerly known as Twitter, which he bought in 2022 for $44 billion, as well as SpaceX, the rockets and satellites business, The Boring Company, a tunnelling venture, and Neuralink, a start-up vying to implant microchips in the human brain.