Elon Musk is setting the stage for what could be one of the artificial intelligence industry’s biggest financial leaps. During a recent investor update on April 21, first shared with CNBC, Musk said he wants to assign a “proper value” to his AI startup, xAI.
He didn't confirm a new fundraising round, but his comment hinted at possible funding from Middle Eastern sovereign wealth funds and global investors, according to people familiar with the matter. This comes after xAI secured $6 billion in late 2024, giving the company a $50 billion valuation, Forbes reported.
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A Big Bet On AI Infrastructure
The $6 billion raise wasn’t for buzz—it powered the expansion of “Colossus,” xAI’s supercomputer in Memphis.
Colossus is built with 100,000 Nvidia NVDA H100 GPUs and was designed to train xAI’s large language model, Grok, and is seemingly one of the most powerful AI clusters to date.
Musk’s ambitions don’t end there. As reported by the Financial Times, Musk already has plans to deploy more than 1 million GPUs, which will require scaling up Colossus. The additional capacity would give xAI a significant edge in the generative AI race, putting it in competition with established players like OpenAI and Anthropic.
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Meanwhile, in March, xAI finalized a $33 billion all-stock merger with Musk’s other venture, X. The combination integrates xAI’s technology with X’s social media ecosystem. Musk said in an X post that the move will provide smarter, and more meaningful experiences to billions of people.
It also solidifies xAI's revenue stream, which industry intelligence platform Sacra estimates at about $100 million annually, primarily from X Premium subscriptions and API services.
After the merger, Musk posted on X, “This combination will unlock immense potential by blending xAI’s advanced AI capability and expertise with X’s massive reach.” His goal? To streamline AI into everyday digital interactions.
Another layer of potential investment surfaced in July. After running a public poll on X, Musk proposed bringing a $5 billion investment from Tesla TSLA into xAI to the automaker’s board.
The poll revealed that 67.9% of voters supported the idea of Tesla investing $5 billion in his artificial intelligence startup, xAI. The initiative could link xAI’s capabilities directly to Tesla’s self-driving software and in-vehicle AI systems.
Looking forward, Bloomberg reported that xAI is seeking to raise an additional $10 billion, potentially pushing its valuation to $75 billion. the funding goal in February and would place xAI in the same financial orbit as top AI labs.
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