Elon Musk’s artificial intelligence startup xAI is pursuing $10 billion in funding at a $200 billion valuation, CNBC reported on Sept. 19.
Sources told the news outlet that the funding proceeds will primarily support data center construction, filled with Nvidia and AMD graphics processing units required for next-generation AI development.
The company is currently building a large AI computing cluster in Memphis, Tennessee, in an effort to build the computational capacity necessary for training advanced models.
xAI’s latest rumored fundraising follows a recent $10 billion debt and equity round, completed weeks earlier, at an approximate $150 billion valuation. The company previously raised $6 billion in December to fund AI development, demonstrating rapid capital consumption typical of large-scale AI operations.
AI mega-rounds
The fundraising represents the latest surge in AI company valuations following similar mega-rounds across the sector. Anthropic raised $13 billion at a $183 billion valuation earlier this month, while OpenAI completed a secondary share sale valuing the company at $500 billion.
The funding pursuit occurs amid persistent issues with xAI’s Grok chatbot, which has generated controversy through problematic responses.
Incidents include the chatbot praising Adolf Hitler, attacking Jewish people, and providing unrelated comments about “white genocide” and South Africa in response to user queries.
According to the report, Grok also lags behind industry leaders Anthropic’s Claude and OpenAI’s GPT models in capabilities and user adoption.
Musk announced in March that xAI merged with X, his social media platform, through an all-stock transaction valuing xAI at $80 billion and X at $33 billion.
Tesla’s board recently requested investor approval for a new Musk compensation package potentially worth $975 billion.
However, Musk stated he opposes merging xAI with Tesla, maintaining separation between his automotive and AI ventures despite potential synergies.
The funding round highlights the AI industry’s capital-intensive nature as companies compete for talent, computational resources, and market position in the rapidly evolving artificial intelligence landscape.