Elon Musk’s xAI raises $6bn in bid to take on OpenAI

Elon Musk’s artificial intelligence company xAI has closed a $6bn (£4.7bn) investment round that will make it among the best-funded challengers to OpenAI.

The startup is only a year old, but it has rapidly built its own large language model (LLM), the technology underpinning many of the recent advances in generative artificial intelligence capable of creating human-like text, pictures, video, and voices.

The funding round, one of the biggest yet in the burgeoning AI field, values the company at $18bn before taking into account the $6bn investment, Musk said on X, the social network he owns.

Generative AI has so far proven very expensive to develop, in part because of the need for huge amounts of computing power and energy to train LLMs. In a blogpost, xAI said: “The funds from the round will be used to take xAI’s first products to market, build advanced infrastructure, and accelerate the research and development of future technologies.”

Musk relied upon several of the investors who have backed his other ventures, including the electric car company Tesla, and the takeover of the social network Twitter, which he renamed X. They included the venture capital investors Andreessen Horowitz, Sequoia Capital and Fidelity Management & Research Company, and Kingdom Holding, a Saudi investor run by Prince Alwaleed bin Talal, a member of the Saudi royal family.

The rise in investor interest in AI was kicked off by OpenAI, which used an LLM to create the chatbot ChatGPT. Musk was a co-founder of OpenAI, but in March he filed a suit against OpenAI, alleging that Sam Altman and other executives had “breached the founding agreement” of the company by pursuing private commercial success instead of working to benefit humanity.

OpenAI, which is working closely with the US tech company Microsoft, is facing competition from Google’s Gemini, Meta’s Llama and other startups such as the Amazon-backed Anthropic and France’s Mistral.

On Monday Musk reposted xAI’s announcement on X, and wrote that the company has a “mission of understanding the universe, which requires maximally rigorous pursuit of the truth, without regard to popularity or political correctness”.

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