xAI secures an additional $6 billion from a16z, Nvidia, QIA, and others 

In a series C investment round, Elon Musk’s artificial intelligence venture xAI raised $6 billion. This adds to the $6 billion chunk xAI raised in May, making the total cash raised $12 billion.

During the week, xAI revealed that Andreessen Horowitz (a16z), Blackrock, Fidelity, Nvidia, AMD, Lightspeed, Morgan Stanley, Valor Equity Partners  Sequoia Capital, and Vy Capital took part in the investment round. 

Other heavy players from the GCC region joined the investment round as well. These include Kingdom Holdings, MGX, Oman Investment Authority (OIA), and Qatar Investment Authority (QIA). According to a public disclosure, Kingdom Holdings—the Saudi conglomerate holding company—invested around $400 million in the round. The disclosure also stated that xAI is now valued at $45 billion, almost twice its former valuation.

In the announcement, xAI wrote, “The funds from this financing round will be used to further accelerate our advanced infrastructure […] xAI is primarily focused on the development of advanced AI systems that are truthful, competent, and maximally beneficial for all of humanity.”

Investors said that xAI has told them it wants to raise more money next year.

xAI to be trained on data from Tesla and SpaceX

xAI plans to train its models using data from Musk’s companies, including Tesla and SpaceX. The models could help those companies improve their tech. Currently, xAI manages SpaceX’s Starlink customer service. The AI startup is also negotiating with Tesla to undertake R&D for a percentage of its revenues.

Tesla stockholders dislike these proposals. Musk has been sued for taking expertise and resources from Tesla to build xAI, which is considered a competitor startup. xAI’s partnerships and products have helped it make $100 million annually. OpenAI hopes to make $4 billion by 2024, while Anthropic expects $1 billion this year.

Musk said this summer that xAI is training the next generation of Grok models at its data center in Memphis. The center was built in 122 days and is partly powered by portable diesel engines at the moment. Next year, xAI wants to improve the server farm, which has 100k Nvidia GPUs and double that number. GeForce GPUs are the best chips for training and running models because they can do many tasks at once.

In November, Memphis’ regional electricity authority allowed xAI to add 150MW, enough to power 100,000 houses. To win agency clearance, xAI promised to improve the city’s drinking water and give Memphis cheaper Tesla batteries. However, other residents opposed the idea, arguing it would strain the grid and worsen air quality.

In its first year, xAI had 12 employees. Today, Musk’s AI venture has 100 employees. They relocated to OpenAI’s old Mission headquarters in October.

In the third quarter of 2024, AI venture capital funding reached $31.1 billion. OpenAI and Anthropic were two of the biggest deals, worth billions each.

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