Elon Musk’s xAI Secures $6 Billion Investment, Becoming Major Competitor in AI Sector

Elon Musk’s artificial intelligence company, xAI, has secured a $6 billion (£4.7 billion) investment, positioning it as a significant competitor to OpenAI. Despite being only a year old, xAI has quickly developed its own large language model (LLM), a key technology driving recent advances in generative AI capable of creating human-like text, images, videos, and voices.

This substantial funding round, one of the largest in the rapidly growing AI sector, values xAI at $18 billion before the new investment. Musk announced the valuation on X, the social network he owns.

Developing generative AI has proven to be costly, primarily due to the vast computing power and energy required to train LLMs. In a blog post, xAI stated, “The funds from the round will be used to bring xAI’s first products to market, build advanced infrastructure, and accelerate the research and development of future technologies.”

Musk tapped into his network of investors who have supported his other ventures, including Tesla and the acquisition of Twitter, now renamed X. Among the investors are Andreessen Horowitz, Sequoia Capital, Fidelity Management & Research Company, and Saudi Arabia’s Kingdom Holding, led by Prince Alwaleed bin Talal.

The surge in AI investment interest was ignited by OpenAI, which developed the chatbot ChatGPT using an LLM. Although Musk co-founded OpenAI, he filed a lawsuit in March against the company, accusing Sam Altman and other executives of deviating from the company’s original mission of benefiting humanity in favor of private commercial success.

OpenAI, collaborating closely with Microsoft, faces competition from Google’s Gemini, Meta’s Llama, and other startups like the Amazon-backed Anthropic and France’s Mistral.

On Monday, Musk reposted xAI’s announcement on X, stating that the company’s mission is to “understand the universe, requiring a maximally rigorous pursuit of the truth, without regard to popularity or political correctness.”