Elon Musk’s artificial intelligence business, xAI, raised $6 billion in a recent investment round, increasing its total capital to $12 billion and valuing the company at $50 billion. According to TechCrunch, this significant investment demonstrates xAI’s desire to compete with top AI companies such as OpenAI and Google.
Big Backers and Future Plans
Major firms and investors contributed to the investment round, including Nvidia, AMD, Andreessen Horowitz, Blackrock, and Fidelity. Interestingly, only people who have backed Musk’s earlier initiatives, like as his purchase of Twitter (now X), were permitted to attend. The minimum investment amount was set at $77,593.
xAI intends to seek further funding next year to continue growing and competing in the fast increasing AI field.
Building World-class AI Supercomputers
xAI has previously constructed a powerful supercomputer named Colossus, which runs on 100,000 Nvidia H100 GPUs. The business plans to quadruple this to 200,000 GPUs soon, with the ultimate objective of reaching one million GPUs.
For example, a supercomputer with 100,000 Nvidia GPUs costs about $6 billion, with GPUs accounting for around half of the cost of such systems. These powerful machines will allow xAI to construct more accurate AI models, giving it an advantage over competitors such as OpenAI’s ChatGPT and Google’s Gemini AI.
How xAI Uses Data
Musk is portraying xAI as a direct rival to OpenAI and Microsoft, accusing them of impeding competition in the AI sector. xAI trains its AI models with data from Musk’s many firms, which include Tesla, SpaceX, and X (previously Twitter). A recent adjustment to X’s privacy policy allows xAI to train on user-generated material.
xAI’s Flagship AI model: Grok
Grok, xAI’s principal AI model, drives various products on the X platform, including a chatbot for X Premium subscribers and the image-generation tool Flux. Grok, unlike other rivals, is meant to respond to more contentious or difficult queries while adhering to specific guidelines.
Grok is now utilized to provide customer care for SpaceX’s Starlink service. The business is also looking into agreements with Tesla for research and development. However, some Tesla stockholders are concerned that Musk’s concentration on xAI may shift resources away from Tesla.
Revenue and Market Position.
Despite its rapid expansion, xAI makes around $100 million per year, far less than competitors such as OpenAI and Anthropic, who earn billions. These startups have also gotten significantly more money. For example, AI venture capital investment totaled $31 billion in the third quarter of 2024.
With cutting-edge technology and lofty aspirations, xAI hopes to acquire a greater portion of this thriving market.
Information extracted from Anton Shilov’s article on Tom’s Hardware, which was published 23 hours ago. You can check out the full article here.
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