Elon Musk’s artificial intelligence company xAI said on Sunday it has raised $6 billion, helping fill the funding gap with OpenAI, Anthropic and other rivals in the booming industry.
The funds would be used “to bring xAI’s first products to market, build advanced infrastructure, and accelerate research and development of future technologies,” the company said in a statement.
Musk, who founded xAI in July, said in a social media post that the funding round valued the company at $18 billion, not including new money. Investors included Silicon Valley heavyweights Andreessen Horowitz and Sequoia Capital, along with Prince Alwaleed bin Talal of Saudi Arabia.
Investors and big tech companies like Google, Meta and Microsoft have invested billions in companies developing AI systems, looking to profit as they are integrated into many aspects of business and everyday life. These investments also reflect the high costs of running generative AI systems, which require enormous amounts of processing power to generate text, sounds and images.
In a recent research report on the latest developments in AI, Deutsche Bank analysts noted that “steady improvements to already surprisingly powerful generative AI models show how the technology has quickly become a gamble for industry leaders.” They said the industry’s major players could not “afford to fall behind in early contests before market positions are consolidated.”
OpenAI, which unveiled the ChatGPT chatbot in late 2022, nearly tripled its valuation over the last year to $80 billion, with about $13 billion in support from Microsoft. Anthropic, which was founded in 2021, has raised about $8 billion, much of it from Amazon, and reached a valuation of about $15 billion. Tech giants like Google and Meta have also spent heavily on their own AI technologies, which are quickly being incorporated into their product lines.
(The New York Times sued OpenAI and Microsoft in December, alleging copyright infringement of news content related to AI systems.)
Musk, who also runs Tesla, SpaceX and other companies, co-founded OpenAI in 2015 but later parted ways with the company when he became disillusioned with its direction — and the AI industry in general.
He sued OpenAI and its chief executive, Sam Altman, in March, accusing them of breaching a contract by putting profits and commercial interests in developing artificial intelligence ahead of the public good. That same month, Musk released the raw computer code behind xAI’s chatbot, an escalation in the heated debate over whether open sourcing these systems could make them more secure or lead to misuse.
Last week, during a remote appearance at a technology conference in Paris, Musk said xAI “still has a lot of catching up to do” to be competitive with technology from OpenAI and Google. “Maybe by the end of this year we will have that.”