Elon Musk’s xAI Is in Advanced Talks to Raise $15 Billion, Lifting Valuation
Like other AI startups, company is burning cash rapidly as it seeks to improve its flagship Grok chatbot
- Elon Musk’s xAI is in advanced talks to raise $15 billion in new equity at a $230 billion valuation.
- This new valuation would be a significant increase from the $113 billion valuation disclosed after xAI acquired X in March.
- Many AI startups, including xAI, are burning cash rapidly as they seek to build infrastructure to help train and refine models.
Elon Musk’s artificial-intelligence company, xAI, is in advanced talks to raise $15 billion in new equity at a $230 billion valuation, according to people familiar with the plans.
The new valuation would represent a significant increase from the $113 billion xAI disclosed after acquiring Musk’s social-media site, X, in March. The terms of the new fundraising were disclosed to investors by Musk’s wealth manager, Jared Birchall, on Tuesday night, the people said.
It couldn’t be determined whether the expected new valuation Birchall shared with investors was premoney or postmoney. Birchall and a spokeswoman for xAI didn’t immediately respond to requests for comment.
CNBC earlier reported xAI’s planned fundraising. After the article was published, Musk wrote “false” in response to an X post about the article from a fellow user of his social-media platform.
Many AI startups, including xAI, are burning cash rapidly as they seek to build infrastructure to help train and refine models. The companies are laying the groundwork for trillions of dollars in spending in the coming years, leaving them in a near-constant state of fundraising.
In June, xAI raised $5 billion in equity and $5 billion in debt to help build out its Colossus data center in Memphis, Tenn. Musk’s rocket company, SpaceX, invested $2 billion in the company as part of that round, The Wall Street Journal previously reported.
Musk, who is chief executive officer of Tesla, has publicly supported the idea of Tesla investing in xAI. At a recent shareholder meeting, Tesla shareholders had a mixed response to a proposal that asked the board to make such an investment, and it is now up to the board to decide.
Ahead of the meeting, Tesla Chair Robyn Denholm told the Journal that she questioned the logic of such an investment and said the board hadn’t yet done any of the due diligence required to move forward.
Musk’s AI startup has raised billions of dollars in its race to compete with OpenAI and to expand the capabilities of its chatbot, Grok, which competes with ChatGPT. News Corp, owner of the Journal, has a content-licensing partnership with OpenAI.
Musk turned his attention to xAI after wrapping up his work with the federal government, the Journal reported. The startup has recently lost several senior executives, including X CEO Linda Yaccarino, as well as the chief financial officers of X and xAI.