Highlights:

  • The business claims that Musk’s goal of developing useful, human-aligned intelligence is what motivates it to work toward developing a secure, reliable AGI.
  • Five months after raising USD six billion, xAI is looking for fresh money because building sophisticated AI models requires both processing power and training.

Elon Musk’s xAI Corp. to reportedly raise additional funds on a USD 40 billion valuation. Approximately five months after the company had raised USD six billion at a valuation of USD 24 billion.

According to the sources, xAI hopes to raise several billion dollars in the upcoming funding round. However, they point out that because the negotiations are still in their early phases, parameters could change, or the discussions could collapse.

Musk founded xAI in 2023 with the goal of creating a sophisticated artificial general intelligence system that outperforms existing AI. The business claims that Musk’s goal of developing useful, human-aligned intelligence is what motivates it to work toward developing a secure, reliable AGI.

Grok-1, the first large language model, was released towards the end of 2023. Grok-1.5 and Grok-2 were released in April and August, respectively. The most recent Grok-2 model can analyze user-provided photos, generate text, debug code, and carry out related activities.

According to xAI’s statement at the time of its release, Grok-2 attained “performance levels competitive” with the most sophisticated LLMs available in the market, according to a study that included eight benchmark datasets that researchers frequently use to gauge an LLM’s accuracy. Grok-2 outperformed OpenAI’s GPT-4o and Meta’s Llama3 405B model in a test known as GPQA, which is remarkable for a very new AI startup.

Five months after raising USD six billion, xAI is looking for fresh capital as building sophisticated AI models requires both processing power and training. Additionally, a significant portion of the prior financing has been used to increase processing power online.

xAI declared in September that it had finished assembling a training system for artificial intelligence with 100,000 graphics cards. The “Colossus” system, which operates on 100,000 Nvidia Corp. H100 graphics cards, is billed by Musk as the “most powerful AI training system in the world.”

The Nvidia H100GPU typically sells for between USD 30,000 and USD 40,000, thus the cost of the GPUs for Colossus before data center building and operating fees comes to roughly USD three billion, give or take. However, Musk and xAI are probably going to receive discounted prices on their bulk purchases. The cost keeps going up when you factor in that 100,000 H100s would also require about 35 megawatts of electricity, which is about the same amount of energy required to run a small town.

Musk said earlier this week that xAI intends to double its Colossus data center from 100,000 H100 GPUs to 200,000, but that’s just the beginning for xAI.

As its competitors continue to raise funds or have discussions about doing so, xAI has announced that it is in talks to raise additional capital. After all, developing state-of-the-art AI models is not inexpensive.

Anthropic PBC was allegedly in negotiations to secure further capital on a USD 40 billion valuation in September, while OpenAI raised USD 6.6 billion on a USD 157 billion value on October 2.