Investor buzz surrounds Musk's AI venture
Elon Musk on Friday rejected reports that his artificial intelligence startup xAI is raising fresh capital, hours after CNBC said the company was securing $10 billion at a $200 billion valuation.
“Fake news. xAI is not raising any capital right now,” Musk wrote on X, the social media platform he owns.
The denial followed a CNBC report citing sources with direct knowledge of the matter. According to the report, xAI was raising $10 billion from investors in a deal that would double the company’s value since July, when PitchBook data placed it at $75 billion.
CNBC’s David Faber reported that the funding would be used to expand xAI’s infrastructure, including data centres powered by Nvidia and AMD graphics processing units, and to recruit high-cost AI researchers. Reuters noted that such a valuation would place xAI among the world’s most valuable private firms, behind OpenAI, ByteDance, and SpaceX.
The report also followed a series of significant financing moves by Musk. Earlier this year, he raised $10 billion in debt and equity at what was believed to be a $150 billion valuation. Last December, xAI closed a $6 billion round to advance its development of large language models.
Investor appetite for AI remains strong. Anthropic said this month it had raised $13 billion at a $183 billion valuation, while OpenAI’s secondary share sale valued the Microsoft-backed firm at $500 billion.
Despite growing interest, xAI has faced criticism. Its Grok chatbot has come under scrutiny after producing offensive responses, including remarks praising Adolf Hitler and comments about “white genocide.” Analysts have also suggested Grok trails competitors such as Anthropic’s Claude and OpenAI’s GPT models in both capability and reach.
Musk launched xAI in July 2023 as a rival to established AI players. In March, he merged the company with his social media platform X in an all-stock transaction that valued the AI startup at $80 billion. He has also announced plans to acquire 1 million AI chips to power next-generation models, with a large-scale supercomputer cluster under construction in Memphis, Tennessee.
