Summary:
xAI is in talks for a funding round aiming for a $40 billion valuation.
The startup was last valued at $24 billion after a $6 billion funding round.
Musk's xAI is developing the AI chatbot Grok, available on X.
The company plans to double its data center capacity in Memphis, Tennessee.
Musk has faced legal issues from Tesla shareholders regarding shared resources.
Elon Musk's artificial intelligence startup xAI is in discussions for a funding round that could value the company at $40 billion. Founded last year, xAI was previously valued at $24 billion after raising $6 billion five months ago, which exceeded initial expectations.
The company aims to secure several billion dollars in this funding round. Any capital raised will contribute to their valuation. Musk has not commented on the matter, which is still in its early stages.
In the competitive landscape of Silicon Valley's AI sector, startups are aggressively raising funds to advance their technology. Notably, OpenAI, the creator of ChatGPT, recently raised $6.6 billion at a $157 billion valuation, marking one of the largest funding rounds in U.S. history.
Additionally, Perplexity, another AI startup, is reportedly in talks to double its valuation to $8 billion. Tech giants like Google and Meta are also making significant investments in AI.
Musk highlighted the need for substantial computing power when training frontier models, emphasizing the importance of infrastructure in AI development. He has previously co-founded OpenAI but left the organization in 2018.
xAI is currently developing its AI chatbot Grok, which is available on Musk's platform X (formerly Twitter). The startup is in the process of expanding its data center in Memphis, Tennessee, aiming to double its capacity from 100,000 to 200,000 GPUs. This facility has been praised by Nvidia's CEO as the fastest supercomputer globally.
Despite its rapid development, xAI is still catching up to established players like OpenAI and Google. Musk has faced legal challenges from Tesla shareholders regarding the use of company resources for xAI. The startup has also started offering a tool for developers to create applications using Grok, which could provide an additional revenue stream.
As of now, xAI's primary source of income appears to be the X Premium subscription, which includes access to Grok. However, the profitability of this subscription remains unclear, with 640,000 subscribers reported out of over 400 million active users on the platform. Musk's ventures have led to the diversion of resources from Tesla to xAI, including Nvidia GPUs and talent from Tesla itself, amidst ongoing scrutiny and lawsuits from shareholders.
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