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There is a stir in the market regarding Elon Musk’s AI company xAI. There was news that the company had raised funding of $15 billion, but Musk called it false. XAI has already reached $200 billion valuation from $10 billion funding and most of its money is being invested in GPU servers. At the same time, XAI’s chatbot Grok and new site Grokipedia have also been accused of spreading false and hateful content.
New Delhi. American billionaire Elon Musk’s artificial intelligence company xAI is once again in the headlines. According to reports, CNBC claimed that xAI has recently raised new funding of about $15 billion from investors, taking its valuation to $200 billion. But Musk immediately rejected this news on his social media platform X, calling it “false”. At the same time, the response to an e-mail sent to xAI by the news agency Reuters was, “The media lies.” However, despite this denial, there has been a stir in the AI industry, as xAI has already raised $10 billion in funding and is now among the most expensive private AI companies in the world.
The issue of funding of xAI has come at a time when the valuation of artificial intelligence companies is skyrocketing. In September, Anthropic completed a funding round of $13 billion, increasing its value three times. Similarly, Sam Altman’s company OpenAI took its valuation to $500 billion with a share sale of $6.6 billion in October. Now the company is preparing for an IPO with a valuation of 1 trillion dollars. In such an environment, the rapid growth of xAI shows that AI has become the first choice of capital investors among startups.
Heavy investment on graphic processing units
According to a CNBC report, most of xAI’s funds are being spent on graphic processing units (GPUs), which are required to train large language models (LLMs). These are the same systems that enable chatbots like ChatGPT or Grok to understand and respond to human-like language. At present, there is a huge demand for GPUs in the entire AI sector and companies like Nvidia are earning billions of dollars from them.
xAI and its chatbot Grok embroiled in controversies
Elon Musk’s xAI chatbot (Grok) has been in controversy since its launch. Critics say that this bot often spreads false and misleading information. Recently launched (Grokipedia) — which Musk had described as an alternative to Wikipedia — also got caught in controversies when hateful content and anti-Semitic posts appeared in it. Because of this, many tech experts have raised questions on Musk’s “free speech” model.
Impact on data centers and environment
xAI’s data centers in Memphis are also facing criticism. According to reports, these data centers draw energy from turbines running on natural gas, which is increasing local pollution. Researchers say that the emissions coming out of these centers are affecting the air quality of the area. This contradiction is also interesting because Musk’s other company (Tesla) itself claims to promote clean energy and sustainable technology.
Relationship between Tesla and xAI
The business relationship between xAI and Tesla is also continuously deepening. xAI has purchased a multimillion-dollar battery energy storage system from Tesla for its Memphis data centers. At the same time, xAI’s chatbot Grok is already integrated in Tesla’s new vehicles. Despite this, the proposal to invest in xAI did not receive enough votes at Tesla’s recent annual shareholder meeting. The company’s general counsel, Brandon Ehrhart, said, “We are considering next steps.”
What will be Musk’s next move?
At present, Musk has called the news of funding “false”, but the valuation of xAI and its plans clearly show that this company is taking every possible step to move ahead in the global AI race. Elon Musk has already said that the purpose of xAI is to create “truthful AI” i.e. truth-based artificial intelligence, which is different from systems like OpenAI.
