Elon Musk's artificial intelligence company xAI said Sunday it had raised $6 billion, helping it close the funding gap with OpenAI, Anthropic and other rivals in an increasingly crowded industry.
The company said in a statement that the funding will be used to “bring xAI's first products to market, build advanced infrastructure, and accelerate research and development of future technologies.”
Musk, who founded xAI in July, said in a social media post that the funding values the company at $18 billion excluding new funds from investors that include Silicon Valley giants Andreessen Horowitz and Sequoia Capital, as well as Saudi Arabia's Prince Alwaleed bin Talal.
Investors and large technology companies such as Google, Meta, and Microsoft are pouring billions of dollars into companies developing AI systems, hoping to benefit from their integration into many aspects of business and daily life. These investments also reflect the high costs of operating generative AI systems, which require massive amounts of processing power to generate text, voice, and images.
“Continual improvements to already astonishingly powerful generative AI models indicate that the technology is quickly becoming a must-have for industry leaders,” Deutsche Bank analysts noted in a recent research report on the latest trends in AI. The analysts said major industry players “cannot afford to fall behind in the early stages before they can establish themselves in the market.”
OpenAI, which launched its chatbot ChatGPT in late 2022, has seen its valuation roughly triple over the past year to $80 billion, with about $13 billion of that coming from Microsoft. Founded in 2021, Anthropic has raised about $8 billion, mostly from Amazon, and is valued at about $15 billion. Tech giants such as Google and Meta are also investing heavily in their own AI technologies, which are rapidly being incorporated into their own product lineups.
(The New York Times sued OpenAI and Microsoft in December, alleging copyright infringement of news content related to their AI systems.)
Musk, whose other companies include Tesla and SpaceX, co-founded OpenAI in 2015 but later left it after becoming disillusioned with the company's direction and the AI industry in general.
Musk sued OpenAI and its CEO Sam Altman in March, alleging breach of contract by putting profit and commercial interests above the public interest in developing artificial intelligence. That same month, Musk published the raw computer code of xAI's chatbot, intensifying a heated debate over whether open-sourcing such systems' code makes them more secure or invites misuse.
Speaking remotely from a tech conference in Paris last week, Musk said xAI “still has a lot of catching up to do” before it can compete with OpenAI and Google's technology, “probably around the end of the year.”
