Believers Back Musk's xAI: Cathie Wood's Ark, Tesla Bull Munster Reveal Taking Stakes As 'The Elon Factor' Beckons

Zinger Key Points
  • xAI now makes up 2% of Cathie Wood-run Ark' venture fund, which has also invested in OpenAI.
  • xAI, set up in July 2023, rivals early entrants such as OpenAI and AI businesses of mega-cap techs.

Elon Musk‘s xAI, which recently raised $6 billion in a fresh funding round, has attracted significant capital from some of the most notable supporters of the tech billionaire and his ventures, including Tesla.

Ark Joins Investors: Cathie Wood‘s Ark Invest, managing several actively managed exchange-traded funds and the ARK Venture Fund, announced an investment in xAI, as of May 26. According to Ark’s website, the venture fund is an “evergreen public-private crossover fund” holding shares of companies throughout their private and public market lifecycles, from early stage to large cap.

In an interview with Bloomberg, Ark Chief Futurist Brett Winton said the stake represents about 2% of the fund’s holdings. The ARK Venture Fund also holds stakes in Tesla, X Corp. (the social media platform owned by Musk), and OpenAI, collectively making up 4% of the fund’s weighting.

Wood, a staunch supporter of Musk, has dubbed him the “Renaissance Man” and strongly believes in the potential of artificial general intelligence. Tesla is the top holding of Ark’s flagship fund, the Ark Innovation ETF ARKK, with the stock comprising 11.5% of the portfolio by value.

Munster Thrilled: Gene Munster, co-founder and Managing Partner of Deepwater Asset Management, another Tesla advocate, announced that his tech-focused venture capital firm has invested in xAI. In a post on X, Munster expressed his enthusiasm, saying, “Thrilled to report that Deepwater is an investor in xAI’s recent round.”

Despite xAI’s lofty $24 billion valuation post-funding, Munster is confident in its potential. He believes that generative AI is just “scratching the surface” and its utility will dramatically increase with the advent of general intelligence. Munster noted that xAI’s model aims to be “truthful, competent, and maximally beneficial for all of humanity,” setting it apart from some existing foundation models.

He added that xAI’s training data from X, boasting 50 million daily active users, provides it with the world’s best real-time intention and news data.

Munster emphasized “the Elon factor” as a crucial advantage for xAI. “His involvement is central to the success of the company given his vision has a unique power to attract world-class talent and deep pockets to fund what will be an incredibly capital-intensive 5-year infrastructure build,” Munster said.

Why It's Important: The Series B funding round saw investments from notable firms such as Valor Equity Partners, Vy Capital, Andreessen Horowitz, Sequoia Capital, Fidelity Management & Research Company, Prince Alwaleed Bin Talal, and Kingdom Holding.

Founded in July 2023, xAI faces competition from early entrants like OpenAI and AI initiatives from mega-cap tech companies. Despite this, xAI has made rapid progress, releasing its Grok-1 chatbot and its next iteration, Grok-1.5.

Musk has faced criticism from certain quarters for developing a separate AI company while previously committing to growing Tesla as an AI and Robotics company.

Read Next: French Startup Minstral AI Gains Traction In US, Targets OpenAI’s Market

Photo via Shutterstock

Market News and Data brought to you by Benzinga APIs
Posted In: NewsShort SellersTop StoriesTechARK Investartificial intelligenceCathie WoodDeepwater Asset ManagementElon MuskGene MunsterJim ChanosStories That MatterxAI
Benzinga simplifies the market for smarter investing

Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.

Join Now: Free!