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Updated December 25, 12:21 p.m. Pacific: Added details on xAI’s valuation and Kingdom Holdings’ investment.

Elon Musk’s AI company, xAI, has successfully raised $6 billion in its Series C funding round.

The financing saw participation from notable firms, including Andreessen Horowitz, BlackRock, Fidelity, Lightspeed, MGX, Morgan Stanley, OIA, QIA, Sequoia Capital, Valor Equity Partners, Vy Capital, Nvidia, AMD, and others. Kingdom Holdings, a Saudi conglomerate, contributed approximately $400 million, as disclosed in a public filing. This funding values xAI at $45 billion—nearly double its previous valuation.

With this latest injection, xAI’s total funding has reached $12 billion, including $6 billion secured earlier in May. The Financial Times reported that only previous investors were allowed to participate in this round, and those who supported Musk’s Twitter acquisition received access to up to 25% of xAI’s shares.

In a statement, xAI shared its plans to use the funding to enhance its infrastructure, accelerate product launches, and push forward its research and development. The company is also preparing to release its most advanced AI model.

Advancing AI Capabilities

Founded by Musk last year, xAI launched Grok, a generative AI model integrated into features on X (formerly Twitter). Grok, available to X Premium users and some free users, is known for its “rebellious streak,” often providing edgy or unconventional responses that other AI systems might avoid. Despite Musk’s criticism of rival AI models for being “woke” or overly cautious, Grok still avoids certain sensitive topics and exhibits a slight left-leaning bias.

Grok has become increasingly embedded in X’s ecosystem, providing functions like image generation (via xAI’s Aurora model), image analysis, and summarizing news and events. Future updates could expand Grok’s capabilities, including improved search, post analytics, and user interaction tools. A “Grok button” was recently introduced to help users explore trending discussions more deeply.

To compete with AI leaders like OpenAI and Anthropic, xAI launched an API in October, enabling integration into third-party apps, and recently introduced a standalone Grok iOS app for testing. Musk alleges that OpenAI and Microsoft are unfairly stifling competition, accusing them of pressuring investors not to fund rivals and benefiting from their collaboration. OpenAI has dismissed these claims as baseless.

Building an AI Ecosystem

xAI aims to leverage data from Musk’s companies, such as Tesla and SpaceX, to enhance its models. Already, xAI supports customer service for SpaceX’s Starlink and is reportedly negotiating with Tesla to provide R&D in exchange for revenue-sharing.

However, Tesla shareholders have raised concerns, filing lawsuits claiming Musk has diverted resources and talent from Tesla to xAI. Despite this, xAI’s products and partnerships have driven its annual revenue to $100 million, though it lags behind competitors like Anthropic ($1 billion) and OpenAI ($4 billion projected for 2024).

xAI is training its next-generation models at a Memphis data center equipped with 100,000 Nvidia GPUs. The center, built in just 122 days, relies partly on portable diesel generators, but xAI plans to double its GPU count next year. It also secured approval for 150MW of additional power and committed to enhancing Memphis’s drinking water quality and supporting the local grid with Tesla batteries. Some residents, however, have voiced concerns about environmental impacts.

Rapid Growth and Future Plans

Since its founding, xAI has expanded from a small team of 12 employees in March 2023 to over 100 today. The company recently moved into OpenAI’s former offices in San Francisco and plans to raise additional funds in 2025.

xAI is not alone in attracting massive investments. Anthropic recently raised $4 billion from Amazon, while OpenAI secured $6.6 billion in October. These large-scale deals have driven AI venture funding to $31.1 billion across 2,000+ deals in Q3 2024, according to PitchBook data.