The Wall Street Journal reported that Elon Musk’s artificial intelligence startup is in advanced talks to raise $15 billion in fresh equity at a valuation of $230 billion. The fundraising terms were outlined to investors by Musk’s wealth manager Jared Birchall on Tuesday night, the report said. It was not clear whether the valuation figure Birchall shared was pre- or post-money, according to the report.
The new valuation would more than double xAI’s $113 billion mark disclosed when it merged with Musk’s social media platform X in March.
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Previously, CNBC reported that xAI was raising $15 billion in a Series E round. However, Musk called the news “false” via X. Sources told CNBC that a lot of the money in this $15 billion round will fund graphic processing units (GPUs) that underpin large language models.
xAI said “Legacy Media Lies” in response to a Reuters request for comment on the latest fundraise, in what seems to be an automated reply.
xAI has been rapidly scaling its data center footprint to train more advanced models as it tries to close the gap with OpenAI’s ChatGPT and Anthropic’s Claude. The company, which was launched in 2023 as a rival to OpenAI, is also investing heavily in infrastructure, including property in Memphis, Tennessee, for its planned Colossus supercomputer.
Musk had previously suggested the idea of using Tesla to back xAI, and Tesla shareholders approved an investment in the startup earlier this month, though a large number abstained. Investors continue to remain bullish on AI, despite growing warnings of an AI bubble, fueled by soaring valuations and aggressive spending plans.
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Artificial intelligence companies have been reaching sky high valuations of late as they raise massive amounts of capital with the increasing demand for foundational models. In September, AI startup Anthropic closed a $13 billion funding round that roughly tripled its valuation from March. OpenAI closed a $6.6 billion share sale at a $500 billion valuation. The ChatGPT-maker has also laid the groundwork for an IPO of $1 trillion.
xAI recently saw the appointment of a new chief financial officer. The Financial Times reported on Monday that Musk has named Anthony Armstrong, a former Morgan Stanley banker who advised him on the acquisition of X, as the new chief financial officer of his artificial intelligence group xAI.
Armstrong will lead the finance operations for both xAI and social media platform X, the report said, citing several people familiar with the matter.