Elon Musk's AI star xAI soars past estimates in first funding round

This surge in investor interest translates to a potential raise of $7-8 billion for xAI

Web Desk - May 11, 2024

Elon Musk looks at his mobile phone in Cape Canaveral, Florida, US January 19, 2020. — Reuters

Elon Musk's artificial intelligence startup, xAI, is on track to secure a much larger funding round than initially anticipated.

Sources close to the deal informed The Post that investor demand has pushed the potential valuation of the company to a staggering $20 billion, exceeding earlier reports of $18 billion.

This surge in interest translates to a potential raise of $7-8 billion for xAI. The company's Grok chatbot, known for its sassy personality, is a competitor to Google's Gemini AI and OpenAI's ChatGPT.

Musk, the visionary behind Tesla, SpaceX, Neuralink, and Boring Company, has reportedly imposed a deadline for investors.

"There's such high demand that people are asking for a chance to put in more money," revealed a source currently investing in xAI. Apparently, a key factor driving this enthusiasm is Musk's persuasive pitch about leveraging Tesla's immense computing power to benefit xAI.

The source claimed that Tesla's electric vehicles currently utilise only 10% of their processing capabilities.

While the funding round has attracted investments from the Middle East, Musk has reportedly steered clear of Chinese capital, including funds from Hong Kong.

This news comes after The Post's exclusive February report that predicted xAI's valuation could reach between $10 billion and $20 billion.

In April, Musk himself hinted at the need for significant resources, stating that xAI would require 100,000 Nvidia H100 chips to train the next iteration of its Grok chatbot, a significant upgrade from the 20,000 chips used for Grok 2.

Interestingly, despite these ongoing developments, Musk has repeatedly denied any fundraising efforts by xAI.

Earlier this year, he wrote on his X platform, "xAI is not raising capital and I have had no conversations with anyone in this regard." However, regulatory filings from late last year already indicated xAI's plans to raise at least $1 billion through an equity offering.