Elon Musk’s artificial intelligence startup, xAI, is reportedly in discussions with investors close to him to raise $3 billion, potentially valuing the company at $18 billion.

• Elon Musk’s xAI startup is reportedly in talks with investors to raise $3 billion, potentially valuing the company at $18 billion, in a move that would intensify the artificial-intelligence arms race.

• Despite Musk’s previous denial of raising additional funds for xAI, recent negotiations indicate a shift in strategy, with potential investors considering special funds to pool resources.

• A substantial cash infusion could enable xAI to compete more effectively in attracting top AI talent and advancing its technology, potentially reshaping the landscape of artificial intelligence.

If finalised, this funding round would mark a significant milestone in the intensifying artificial-intelligence arms race.

One of the key figures involved is Steve Jurvetson, a long-time associate of Musk who serves on the board of SpaceX, Musk’s rocket company, and was previously a director at Tesla.

Another player in these talks is Gigafund, co-founded by Luke Nosek, also a SpaceX director and a member of the influential “PayPal mafia” group.

The specifics of the fundraising, however, remain fluid, and details have not been finalised.

Elon Musk launches AI firm xAI as he looks to take on OpenAI | Reuters

Large language models

This potential injection of funds reflects the escalating competition among leading AI startups, which have been raising substantial amounts to support the development of advanced large language models, such as those powering generative AI chatbots.

OpenAI, the organisation behind ChatGPT, recently secured $13 billion in funding from Microsoft, while its competitor, Anthropic, raised over $6 billion. Musk’s xAI, comparatively less funded, has been endeavoring to catch up with its rivals.

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The company publicly launched in July and released its chatbot, Grok, later that year. Last month, it unveiled its latest AI model, Grok-1.5.

While xAI’s efforts to raise capital have previously been denied by Musk, recent talks indicate a shift in strategy.

Some potential investors are considering raising special investment funds to pool resources from various sources rather than relying solely on major venture firms.