Elon Musk's xAI Seeks $6B At $50B Valuation To Acquire 100K Nvidia Chips For Memphis Data Center

Elon Musk’s artificial intelligence venture, xAI, is reportedly in the process of raising up to $6 billion. The funds are intended for purchasing 100,000 Nvidia Corp. NVDA chips.

What Happened: xAI's latest funding round is expected to close early next week, as reported by CNBC on Friday. It includes $5 billion from Middle Eastern sovereign funds and an additional $1 billion from other investors. Some of these investors may be looking to increase their stakes.

This fundraising would value Musk's AI startup at $50 billion, more than doubling the $24 billion valuation in its previous round of funding in May.

The chips are crucial for the new Memphis supercomputer, which will support Tesla Inc.’s TSLA Full Self-Driving (FSD) technology.

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xAI, launched in July 2023, aims to “understand the true nature of the universe,” according to its website.

Last year, xAI introduced a chatbot named Grok, inspired by “The Hitchhiker’s Guide to the Galaxy.” The chatbot was designed to compete with OpenAI’s ChatGPT, Google’s Gemini, and Anthropic’s Claude.

See Also: Taylor Swift Fans Abandon Elon Musk’s X For Bluesky, Says Report

Why It Matters: Earlier this year, xAI raised $6 billion in its Series B funding round, catapulting its valuation to $24 billion.

This positioned xAI among the world’s most valuable AI startups, alongside giants like Microsoft Corp.-backed MSFT OpenAI and Anthropic. Despite this, xAI is not yet the largest AI startup in terms of valuation.

The planned Memphis supercomputer, a key component of xAI’s strategy, is set to enhance its AI capabilities. The project, located at a former manufacturing site, is awaiting approval from local authorities. Discussions with city officials began in March, underscoring the competitive nature of securing such high-profile projects.

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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

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