Elon Musk’s xAI reportedly in talks to raise new funding on $40B valuation – SiliconANGLE

Elon Musk’s xAI Corp. is reportedly in talks with investors to raise additional funding on a $40 billion valuation, some five months after the company had previously raised $6 billion on a $24 billion valuation.

The Wall Street Journal, citing people familiar with the matter, reported that xAI is looking to raise several billion dollars in the new funding round. The Journal does note, however, that the talks are in their early stages, meaning that terms could change or the talks could fall apart.

Launched by Musk in 2023, xAI is aiming to develop an advanced artificial general intelligence system that surpasses current AI capabilities. The company says it’s focused on building a safe, robust AGI that is driven by Musk’s vision of creating beneficial and human-aligned intelligence.

It released its first large language model, Grok-1, late in 2023 before releasing Grok-1.5 in April and Grok-2 in August. The latest Grok-2 model can generate text, troubleshoot code, perform related tasks and analyze user-provided images.

At the time of its release, xAI claimed that, based on an evaluation comprising eight benchmark datasets that researchers commonly use to measure an LLMs’ accuracy, Grok-2 achieved “performance levels competitive” with the most advanced LLMs on the market. On one test called GPQA, Grok-2 achieved higher scores than OpenAI’s GPT-4o and Meta’s Llama3 405B model, an impressive outcome for a relatively young AI company.

Building advanced AI models requires training and processing power, with the latter being why, five months after raising $6 billion, xAI is seeking yet more funding. And the previous funding has, in large part, gone toward bringing online more processing power.

In September, xAI announced that it had completed the assembly of an artificial intelligence training system that features 100,000 graphics cards. Called “Colossus,” the system is claimed by Musk to be the “most powerful AI training system in the world” and runs on 100,000 Nvidia Corp. H100 graphics cards.

Though it’s likely that Musk and xAI will be getting discounted rates on their bulk buys, the Nvidia H100GPU generally sells for about $30,000 to $40,000 each, putting the cost for the GPUs for Colossus before data center construction and running costs at around $3 billion give or take. Add to the mix that 100,000 H100s would also use approximately 35 megawatts of power, roughly the equivalent of the energy needed to power a small town, and the cost continues to spiral.

For xAI, that’s also just the start, with Musk announcing earlier this week that xAI plans to double its Colossus data center from 100,000 H100 GPUs to 200,000.

The news that xAI is in talks to raise more funding comes as its competitors continue to either raise funds or hold discussions to do so. After all, building cutting-edge AI models doesn’t come cheap.

Recent AI-related funding news includes OpenAI raising $6.6 billion on a $157 billion valuation on Oct. 2, while Anthropic PBC was reportedly in talks to raise new funding on a $40 billion valuation in September.

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