Elon Musk’s OpenAI competitor xAI secures nearly $6B in funding, with his social network X as a shareholder

Elon Musk’s xAI, a 10-month-old competitor to OpenAI, is making waves in the tech world as it raises a staggering $6 billion on a pre-money valuation of $18 billion. This news comes from a trusted source close to the deal, revealing that investors will own a quarter of the company once the deal is finalized in the coming weeks.

The deal terms have already seen adjustments, with initial figures of $3 billion at a $15 billion valuation quickly changing due to high demand from investors. Notable participants in the round include Sequoia Capital, Future Ventures, Valor Equity Partners, and Gigafund, all with ties to Musk’s inner circle.

What sets xAI apart is its ambitious goal of bridging the digital and physical worlds by leveraging data from Musk’s various companies, including Tesla, SpaceX, Boring Company, and Neuralink. The company’s chatbot, Grok, has already been integrated into Musk’s social media platform, X, as a paid add-on.

Musk’s overarching vision involves creating a virtual cycle where data from his companies feeds into xAI, enhancing its capabilities to master real-world tasks like self-driving cars and humanoid robots. This strategy not only benefits xAI but also X, which stands to gain from its stake in the AI outfit.

The implications for OpenAI, a rival company co-founded by Musk in 2015, remain uncertain. Musk’s public criticisms and legal battles with OpenAI underscore the competitive landscape in the AI industry. With xAI’s rapid growth and innovative approach, the tech world eagerly awaits the next chapter in this high-stakes rivalry.