Elon Musk’s xAI raises $6 billion from Nvidia, AMD, and others
What just happened? Elon Musk-led AI startup xAI has raised $6 billion in Series C funding, valuing the company at around $40 billion, up from $24 billion earlier this year. Some of the notable investors who participated in this round include semiconductor giants Nvidia and AMD, as well as major VCs and asset management firms, such as BlackRock, Fidelity, Andreessen Horowitz, Sequoia Capital, and more.
In total, 97 investors were involved in this round of funding, with the minimum investment per participant pegged at $77,593. Investors were only allowed to participate if they had helped Musk raise funds for his Twitter acquisition in 2022. xAI is reportedly planning to raise additional funds next year as it strives to compete with Google and OpenAI, which have opened up a substantial lead in the high-stakes generative AI game.
Since closing its Series B funding round in May 2024, xAI has built a high-power supercomputer called ‘Colossus’ and released its Grok-2 frontier language model with state-of-the-art reasoning capabilities. Colossus is expected to make it easier for xAI to build and test its AI models, including the aforementioned Grok LLMs that power a chatbot for X Premium users and the Flux image generator.
Believed to be the world’s largest supercomputer, Colossus is powered by 100,000 Nvidia H100 GPUs, each costing upwards of $30,000. xAI plans to use some of the new funds to double the size of Colossus to 200,000 Nvidia Hopper GPUs.
Musk is an important player in the AI sector, having helped found OpenAI in 2015. However, he left the project in 2018 following disagreements with other co-founders, including Sam Altman, who is currently the company’s CEO. Musk has also often sounded the alarm against AI, claiming it could destroy humanity without sufficient guardrails.
As part of his continuing battle against OpenAI and its founders, Musk sued the company earlier this year, alleging “deceit of Shakespearean proportions.” According to his lawsuit, Altman and another co-founder, Greg Brockman, violated the founding contract that envisioned OpenAI as a non-profit organization dedicated to public good.
Altman, however, rejected all charges, saying Musk was the one who originally wanted to establish OpenAI as a for-profit company. According to him, the founding members agreed in 2017 to convert OpenAI into a for-profit venture, but rejected Musk’s demand for majority equity and the post of the company’s CEO. He also alleged that the SpaceX and Tesla CEO is now trying to thwart OpenAI’s progress to help his own fledgling AI startup.
