Elon Musk’s xAI in Talks for $15 Billion Funding
Elon Musk’s xAI is reportedly negotiating to secure $15 billion in new equity, despite Musk labeling a CNBC article about this funding round as “false” just last week.
If the deal goes through, it would push xAI’s valuation to an impressive $230 billion, according to sources cited by The Wall Street Journal. This marks a significant increase from the $113 billion valuation the company mentioned after it acquired Musk’s social media platform, X, earlier this year in March.
When asked for more information, xAI responded with an automated message stating, “legacy media lies.”
Jared Birchall, Musk’s wealth manager, informed investors of the new financing details on Tuesday night, as reported by the Journal. However, the source also noted that it remains unclear whether the updated valuation reflects the company’s worth before or after this additional funding.
Musk recently criticized CNBC’s reporting, calling it inaccurate. The network had cited anonymous sources suggesting that xAI had expanded its funding from an original $10 billion to $15 billion.
Previously, a $10 billion funding round had been reported, which raised the company’s valuation to $200 billion, according to CNBC in September. Musk had also dismissed that report as incorrect.
The AI startup, launched by Musk in July 2023, has been securing significant funds while striving to develop vast data centers to compete against giants like OpenAI.
In June, for instance, xAI raised $5 billion in equity alongside another $5 billion in debt to construct its ambitious Colossus supercomputer in Memphis, Tennessee.
Interestingly, SpaceX, Musk’s aerospace venture, contributed $2 billion to that funding effort, which raised eyebrows due to environmental concerns surrounding xAI’s reliance on gas-burning turbines—leading critics to argue this could negatively impact local air quality.
There have been mixed reactions to Musk’s Grok chatbot and Grokipedia, an AI-enhanced alternative to Wikipedia, with some praising it for neutrality while others suggest it has biases, a typical dilemma in technology today.
Recently, Musk has also been concentrating on merging his various businesses, pushing for Tesla’s involvement in xAI.
At a recent meeting, Tesla shareholders didn’t approve a proposal that would enable the company to invest in xAI, which has left the board deliberating on future support.
Some new Tesla vehicles are now featuring xAI’s Grok chatbot integrated into their infotainment systems. At the same time, xAI purchased Tesla’s battery storage system valued at tens of millions for its data centers.
Amid these developments, Tesla investors passed Musk’s compensation plan after the company hinted at potential resignations if the proposal, deemed the largest pay plan in history, wasn’t accepted. If successful, this plan could elevate Musk from being the world’s richest individual to claiming the title of the first trillionaire, contingent on meeting a challenging set of goals within the next decade.
