Elon Musk’s xAI valued at $24B with new investor backing

Elon Musk’s AI firm, xAI, has secured an additional $6 billion from investors, including prominent Silicon Valley venture capitalists and Saudi Prince Alwaleed Bin Talal, bringing its valuation to $24 billion.

This second round of funding was provided by Sequoia Capital, Andreessen Horowitz, and Prince Alwaleed Bin Talal, as announced by xAI in a blog post on Sunday. Musk, who established xAI in July last year, mentioned on the social media platform X (formerly Twitter) that further announcements would be made in the coming weeks. He noted that xAI was valued at $18 billion before this latest investment.

xAI stated that the new funds would be used to launch its initial products, develop advanced infrastructure, and expedite research and development of future technologies.

This funding positions xAI as a potential competitor to OpenAI, the AI research organization behind the highly popular chatbot ChatGPT. Musk, a co-founder of OpenAI, left the company six years ago due to disagreements about its direction.

In November, xAI revealed it was developing an AI-powered chatbot named “Grok” for some paying users of X. At the time, Musk indicated that Grok was being trained with real-time access to information on the social media platform.

Since then, xAI has introduced versions of Grok 1.5, featuring enhanced long-context and image capabilities. The company is also hiring engineers and researchers in Palo Alto, San Francisco, and London.

Investors are highly interested in AI’s potential to transform daily life and work, leading to substantial financial support for AI companies in recent years. Microsoft is OpenAI’s largest investor, having committed $13 billion to the firm. Last year, Amazon announced a plan to invest up to $4 billion in Anthropic AI for partial ownership.

However, bringing AI products to market is challenging, even for the biggest companies. Earlier this month, Google launched an AI-generated search tool designed to summarize search results quickly. The tool faced criticism for providing inaccurate or misleading information, causing the company to retract some incorrect results.