The AI “race” is about to heat up as Musk’s new startup pledges billions toward new artificial intelligence development, alongside major companies like OpenAI and Amazon.
$6 Billion Invested in xAI
Elon Musk’s latest project, the AI-focused startup xAI, has raised $6 billion in funding for artificial intelligence development, thanks to a group of investors.
Series B Funding Round
The company, which was founded just over a year ago, confirmed the latest round of funding (Series B) on its website on Sunday.
Help Speed Up Development and Production
This newest set of funding will be used to speed up the development and production of xAI’s first market offerings, as well as contribute to the “significant strides” that the company has claimed to have made in the last year.
Plans for the Future
In the same statement, the company described its plan to release its “first products to market, build advanced infrastructure, and accelerate the research and development of future technologies” with the help of the extra funding.
xAI Mission Statement
Musk also took to his social media platform X to make the announcement, and to explain the company’s “mission of understanding the universe, which requires maximally rigorous pursuit of the truth, without regard to popularity or political correctness”.
Investor Group Members
The latest investor group includes Andreessen Horowitz, Sequoia Capital, Fidelity Management & Research, Valor Equity Partners, Vy Capital, Saudi Prince Alwaleed Bin Talal, and Kingdom Holding.
Valuation and LLM Development
Musk’s new company is now valued at $18 billion, according to a post on X by the CEO. After just a year of development it already has its own large language model (LLM), which is the technology needed for AI to interpret and generate human text, images, and video.
First Product With Limited Release
xAI’s first product was made available in December last year, with a limited run only available to a select group of X users with “verified” blue check mark status X Premium accounts.
Introducing Grok
This product was Grok, an AI answer bot marketed as a more gritty, cutting-edge version of Open AI’s ChatGPT, which revolutionized the artificial intelligence market.
Product Description
“Grok is designed to answer questions with a bit of wit and has a rebellious streak, so please don’t use it if you hate humor!” the xAI website description reads.
An Expensive Update
However, in order to upgrade Grok before it can be released as a publicly available product, and before it can develop and release other products, the company will require some very expensive hardware and computing power.
Nvidia Chips Needed
A recent report from tech business publication The Information showed that xAI will need at least 100,000 of Nvidia’s H100 GPU chips to build a supercomputer that could power a new version of Grok.
$4 Billion Price Tag
At a cost of approximately $40,000 a piece, this would set the startup back by $4 billion just to produce this upgraded version.
Worth the Price?
But for Musk and other executives pushing forward in the exploding AI industry, any price is worth it for innovation. And xAI is currently competing with heavy-hitters like OpenAI, Google, and Amazon in the race for chips and innovative technology.
Altman Seeking Trillions
OpenAI CEO Sam Altman is allegedly seeking trillions of dollars for the company’s next round of funding, specifically to pour into the global chip industry.
Microsoft and OpenAI Team Up
Now that Altman has also struck up a multi-million dollar partnership with Microsoft to develop advanced supercomputing systems for the company’s research, Musk and other competitors will need to make greater strides to keep up.
Amazon’s Anthropic
Last month Amazon also announced a $2.75 billion investment in Anthropic, its own artificial intelligence safety and research company first founded in 2021.
Other Competitor’s Step Up
Google’s Gemini, a multimodal large language model, Meta’s Llama, an LLM research assistant, and France’s biggest AI product Mistral, are the other major competitors in the AI race.
Potential Payday for Musk
However, Musk may have more capital to provide for the project himself, if he is able to secure the historic $56 billion CEO pay package that he is pursuing at Tesla.
Tesla Vote Looming
This week the votes will open for shareholders to vote on a proposal to give Musk the largest compensation package in history, and a decision will be finalized at the next annual meeting on June 13th. If it passes, it may give Musk the opportunity to put his money where his mouth is.
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