Elon Musk’s company, xAI, raised $6 billion in its latest funding round, bringing the total amount raised to $12 billion.
The financing, which was disclosed in a US Securities and Exchange Commission filing, included 97 investors, including Andreessen Horowitz, BlackRock, Fidelity, Nvidia, AMD and Sequoia Capital, although individual contributions were not detailed.
Reports indicate that xAI is now targeting a $50 billion valuation, which is double its value from six months ago.
The latest funding round only allowed participation from previous investors, including those who helped fund Musk’s acquisition of Twitter. Some of these investors have reportedly been able to access up to 25% of xAI shares.
xAI’s leading generative AI model, Grok, has been integrated into X (formerly Twitter), where it powers chatbots and image creation tools. The model is promoted as less “politically correct” than competitors such as ChatGPT, although it has faced controversies of its own.
xAI recently launched an API to enable Grok integration with third parties and introduced a standalone iOS app for select users.
Legal battles have also marked xAI’s journey, with Musk accusing OpenAI of deterring investors from funding competitors. Musk highlights the X Data Policy, which now allows third-party training of AI models on posts, as a strategic advantage for XAI.
There are plans underway for xAI to leverage data from Musk’s other companies, including Tesla and SpaceX, to enhance its own AI models. However, this integration has drawn criticism, with Tesla shareholders filing lawsuits alleging the diversion of resources to XAI.
Despite the controversies, xAI generates annual revenue of about $100 million, though it lags behind competitors like OpenAI, which is targeting $4 billion in revenue by 2024.
The company is also expanding its infrastructure, operating a Memphis data center powered by 100,000 Nvidia GPUs, with plans to double that capacity next year. The facility supports Tesla’s XAI operations and self-driving research. xAI recently secured 150 megawatts of additional power for the centre, and in return has pledged improvements to local facilities.
xAI has grown rapidly since its founding, expanding its team from 12 employees in 2023 to over 100 employees today. The company now occupies the former OpenAI headquarters in San Francisco and is planning further fundraising efforts in 2025 to remain competitive in the AI sector.
Competitors such as Anthropic and OpenAI have also raised significant funds, contributing to a surge in AI venture capital activity, which reached $31.1 billion across 2,000 deals in the third quarter of 2024.