Musk's xAI seeks billions to rival his first AI venture

Elon Musk’s artificial intelligence startup, xAI, is reportedly in talks to raise $6 billion in funding. This would be a significant investment for the company, aiming to compete with Microsoft-backed OpenAI in developing generative A.I. models.

xAI is aiming for a valuation of $20 billion, which would put it in the same league as OpenAI. The company has already launched its first product, a chatbot named Grok, and is progressing in developing its A.I. technology.

Musk is targeting investors around the world, including those in Hong Kong. This could raise concerns about geopolitical tensions and U.S. export controls on A.I. technology. Morgan Stanley is helping to coordinate the fundraising, and the bank has experience working with Musk, having helped finance his buyout of Twitter in 2022.

OpenAI, xAI’s main rival, has raised about $13 billion from Microsoft alone. Other startups such as Anthropic and Cohere have also raised billions of dollars from Google, Amazon, and Silicon Valley’s top venture capital groups, which are under investigation by the FDA.

Musk was a founding investor in OpenAI but walked away in 2018 over disagreements with chief executive Sam Altman.

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