Elon Musk’s xAI secures $6B to challenge OpenAI in AI race

Elon Musk founded xAI last summer, and The Verge just reported that it’s already making waves by announcing a massive $6 billion funding round. According to the company, this money will help bring xAI’s first products to market, build advanced infrastructure, and accelerate research and development efforts into future technologies.

Musk has some history in the AI space. He co-founded OpenAI in 2015 alongside the current CEO, Sam Altman, and others. However, he parted ways with the company in 2018 due to disagreements over its priorities and direction, specifically OpenAI’s move away from open-source AI models and towards proprietary, closed models that they sell access to. Musk became one of OpenAI’s most vocal critics after that.

Fast-forward to July of last year, and Musk formally re-entered the generative AI arena with the announcement of xAI. Since then, the company has been aggressively working on building advanced AI systems that it claims will be “truthful, competent, and maximally beneficial for all of humanity.”

One of xAI’s first offerings is Grok, an edgier version of OpenAI’s ChatGPT. It is currently available only to X Premium subscribers. According to benchmarks shared by xAI, Grok-1 outperformed models like Llama-2-70B and GPT-3.5 but still lagged behind Anthropic’s Claude3, OpenAI’s GPT-4, Google’s Gemini, and Meta’s open-source Llama 3.

This latest funding round saw investments from big names, including Andreessen Horowitz, Sequoia Capital, and even Saudi Arabian Prince Al Waleed bin Talal. Last year, filings showed xAI was looking to raise up to $1 billion in equity investments, and just a few months ago, reports surfaced that they had increased their target to a whopping $6 billion—a figure Musk initially denied.

Developing the hardware capable of powering AI at this sophisticated level is no small feat and certainly is costly. Just last week, a report revealed that xAI would need an astonishing 100,000 of Nvidia’s current H100 chips for a supercomputer to power an upgraded version of Grok, each costing between $30,000 to $40,000.

Musk has ambitious plans for these powerful resources. He reportedly informed investors that the goal is to launch this new data centre by fall 2025, marking a significant step forward in xAI’s technological capabilities.

Continuing this AI race for chips, talent, and technology will be expensive. Big tech firms have already invested billions into AI startups like Anthropic, on top of what companies like Google, Apple, Amazon, Microsoft, and Meta are investing in their own AI projects.

Microsoft, in particular, has struck a multi-billion-dollar partnership with OpenAI, whose CEO, Sam Altman, is reportedly pursuing trillions more to revamp the global chip industry.

Tesla will continue to hire AI engineers for self-driving cars, even though Elon Musk has previously stated a preference for not bringing most of those AI and robotics capabilities in-house, to allow greater focus on external ventures. He talks about breaking free from the traditional constraints of auto manufacturing as part of a broader agenda.

At the same time, Tesla is gearing up for its annual meeting on June 13, where shareholders will start voting on whether to reinstate Musk’s record-breaking $56 billion pay package, a significant development given Musk’s substantial influence across various tech sectors.

Over the years, Musk has made substantial contributions to AI research, and now his venture, xAI, is at the forefront of AI developments. It will be fascinating to watch how these efforts unfold and see which of xAI’s contributions will secure a place in the annals of AI history during this rapid evolution.

See also: Elon Musk’s xAI open-sources Grok

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