Elon Musk’s xAI raises $6B to bolster battle against OpenAI

Elon Musk’s artificial intelligence startup xAI revealed that it raised $6 billion in its latest funding round as the startup continues to ramp up in its battle against bitter rival OpenAI.

Musk took a victory lap after announcing Monday on his social media platform X that the company concluded its Series C funding round — which is usually the final stage of venture capital financing.

“We are gonna need a bigger compute!” Musk wrote, in an apparent reference to the famous line from “Jaws.”

The need for a “bigger compute” is likely an indication that Musk plans to use the investment to build larger processing centers to warehouse super computers that will be needed to train and run more sophisticated AI models.

The company had raised $6 billion in a Series B funding round in May at a post-money valuation of $24 billion. In late November, xAI raised another $5 billion at a $50 billion valuation, according to the Wall Street Journal.

Now, it appears xAI raised a bigger round of $6 billion, but Musk didn’t disclose the valuation.

Investors in the latest funding round included Sequoia Capital, Morgan Stanley, BlackRock, Fidelity, Saudi Arabia’s Kingdom Holdings, the sovereign wealth funds of Oman and Qatar, Lightspeed Venture Partners, Valor Equity Partners, Dubai-based Vy Capital and UAE-based MGX, the company said.

In its latest announcement, xAI said that it is training Grok 3, the latest version of its chatbot, which was originally scheduled to be available by the end of this year.

The infusion of cash comes as Musk is engaged in an AI arms race against ChatGPT maker OpenAI, the company he co-founded and which is now run by Sam Altman.

Musk, who left OpenAI after losing a power struggle against Altman and other co-founders, is suing the company and its key financial backer Microsoft.

He is alleging that Microsoft and OpenAI, which as of October was valued at around $157 billion, illegally sought to monopolize the market for generative artificial intelligence and sideline competitors.