What We Know About XAI As It Bolsters Itself For AI Race—With $6 Billion In New Funding

Topline

Elon Musk’s artificial intelligence startup xAI disclosed Thursday it raised $6 billion in equity financing—the company’s latest step forward as it raises funding and expands its rapidly growing supercomputer site in hopes of cementing itself in a competitive artificial intelligence market.

Key Facts

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Musk, who has said he plans to double the size of his startup’s AI training cluster, also recently greenlit the addition of at least 1 million graphics processing units to xAI’s multibillion-dollar supercomputer in Memphis, Tennessee (the additional GPUs can be used to train AI models and scale up the supercomputer’s workload). The supercomputer will be crucial in further developing xAI’s main product, a chatbot known as Grok that is available to users on X, formerly known as Twitter. The AI tool will soon be available through its own standalone app similar to OpenAI’s ChatGPT, the Journal reported.

Chief Critics

The rapid construction and expansion of xAI’s supercomputer has drawn criticism from multiple members of the Memphis City Council and environmental activists. Councilmember Rhonda Logan told Forbes this summer the council needed more time to understand the impacts of the facility housing and powering the supercomputer, blasting what’s been criticized as a quiet decision-making process about the facility’s construction that allegedly left councilmembers out of important discussions. Councilmember Pearl Walker told Forbes her constituents were concerned about the supercomputer’s impact on their local energy supply and water. The Memphis Community Against Pollution said in a statement the city “must consider how an industry using such a tremendous amount of energy will further impact communities already overwhelmed with pollution and a high energy burden, such as those around the xAI facility in southwest Memphis.”

Forbes Valuation

We estimate Musk’s net worth at $354.2 billion, making him the world’s wealthiest person, ahead of Amazon founder Jeff Bezos ($240.8 billion) and Oracle co-founder Larry Ellison ($236.1 billion).

Big Number

122 days. That is how long it took to construct the xAI supercomputer in Memphis, according to booming chip designer Nvidia, which helped build the facility.

Key Background

xAI was established in 2023 by Musk, who was previously a co-founder and board member of OpenAI and would go on to position xAI as a direct competitor to the AI firm he helped create. Musk had disagreements with OpenAI about its for-profit structure and control of its board, though he has primarily cited conflicts of interest with Tesla’s AI work as his main reason for leaving. Although xAI showed up to the AI race a bit later than its contemporaries, the company has grown fast, taking advantage of being able to train its AI models with data from X and Tesla while also boasting serious AI training power driven by its “Colossus” supercomputer in Memphis. OpenAI CEO Sam Altman said during The New York Times DealBook Summit this week he assumes xAI will “be a really serious competitor,” lauding how quickly Musk’s company built its supercomputer.

Further Reading

Inside Elon Musk’s Mad Dash To Build A Giant xAI Supercomputer In Memphis (Forbes)

Elon Musk’s Mad Dash To Build A Giant xAI Supercomputer In Memphis (Forbes)