Elon Musk’s artificial intelligence startup, xAI, has told investors it raised $5 billion in a funding round valuing it at $50 billion—more than twice what it was valued at several months ago.
Qatar’s sovereign-wealth fund, Qatar Investment Authority, and investment firms Valor Equity Partners, Sequoia Capital and Andreessen Horowitz are expected to participate in the round, according to people familiar with the matter. The financing brings the total amount xAI has raised to $11 billion this year.
xAI was previously raising funds at a $40 billion valuation, before factoring in the new cash, The Wall Street Journal reported. Over the past few weeks, xAI raised that figure by $5 billion in negotiations with investors. The infusion of new cash brings its total post-investment value to $50 billion.
xAI was valued at $24 billion when it raised $6 billion in the spring.
Investor interest in Musk’s businesses, including xAI and SpaceX, have increased since Donald Trump won the presidential election. Musk spent hundreds of millions of dollars to boost Trump’s campaign and led rallies on behalf of the Republican. He has worked on the early stages of Trump’s transition back to the White House and is co-leading an effort to cut government spending.
Tesla’s stock is up about 35% from its close on Election Day through Wednesday.
In late-October, the same time he was stumping for Trump in Pennsylvania, Musk spoke at an xAI investor call, some of the people familiar with the matter said.
xAI, which launched in July of last year, plans to use the new cash in part to finance the purchase of 100,000 additional Nvidia chips for training AI models.
The startup recently told investors its revenue has reached $100 million on an annualized basis.
xAI’s primary product is its Grok chatbot, available to premium subscribers of Musk’s social network X. The company also recently made Grok available to business customers.
Grok launched in November 2023, making it late to a race with competitors including OpenAI, Alphabet’s Google and Anthropic. xAI spent this past summer constructing a new data center in Memphis, Tenn., that houses 100,000 Nvidia chips for building its AI models.
Musk has said the Memphis data center contains the most powerful AI cluster in the world and that he is planning to double its size.
Musk is particularly focused on beating OpenAI, the ChatGPT creator he co-founded in 2015. He has sued the startup and its chief executive Sam Altman for alleged fraud and antitrust violations, claims OpenAI has called baseless.
OpenAI was valued at $157 billion in its most recent funding round, which closed in October.
AI startups must frequently raise money due to the escalating costs of developing their technology and intense competition in the industry, where they also face profitable tech giants like Google and Meta Platforms.
xAI is set to debut the third version of its Grok language model in December. Musk has said it will be “the world’s most powerful AI by every metric.”
Write to Berber Jin at berber.jin@wsj.com, Tom Dotan at tom.dotan@wsj.com and Meghan Bobrowsky at meghan.bobrowsky@wsj.com
