Elon Musk’s xAI Closes $6bn Funding, Plots Colossus AI Supercomputer Expansion

Elon Musk’s AI firm, xAI, has gained billions more dollars in funding, amid expansion plans for its Colossus supercomputer at the Memphis, Tennessee facility.

A filing with the US Securities and Exchange Commission on Thursday, revealed that xAI has raised $6 billion (£4.7 billion), with unidentified investors contributing a minimum of $77,593 per filing.

This is on top of the $6 billion in funding that xAI received in May 2024 from major venture capital firms such as Lightspeed Venture Partners, Andreessen Horowitz, Sequoia Capital and Tribe Capital, which had valued the firm at $24 billion (£18.8bn) earlier this year.

New funding

When xAI was first reported to be seeking new funding in late 2023, its target figure was only $1 billion.

Last month CNBC had reported that xAI was seeking a $50 billion valuation – double its valuation as of six months ago.

The funding would be used to purchase 100,000 Nvidia chips for Memphis data centre.

While the identities of the latest investors was not revealed, the Financial Times reported that only investors who’d backed xAI in its previous May fundraising round were permitted to participate in this one.

So with the latest tranche of funding secured, xAI has received $12 billion so far, after it was founded by Elon Musk in July 2023.

The start-up is playing catch-up to tech giants such as Google and well-funded start-ups such as Microsoft-backed OpenAI, and Amazon-backed Anthropic.

AI training

The previous funding round was reportedly marketed to investors with a pitch touting Musk’s success with Tesla and SpaceX.

Previous funding pitches for Musk’s firm argued xAI would have advantages over rivals through its connections to other Musk companies, including high-quality data from X (formerly Twitter) for use in training its large language model (LLM).

Musk has previously said he wants xAI, whose first product is the Grok chatbot, to be as “truth-seeking” as possible and has criticised competitors for being too politically correct.

For example, if asked to be vulgar, Grok will swear, utter profanities and engage with colourful language not heard from rival AI models.

Grok now powers a number of features on the X social media platform, including a chatbot accessible to X Premium subscribers and free users in certain regions.

xAI lawsuit

In a lawsuit filed against OpenAI and Microsoft in August, OpenAI was accused of allegedly “actively trying to eliminate competitors” like xAI by “extracting promises from investors not to fund them.”

Musk’s counsel also alleges that OpenAI unfairly benefits from Microsoft’s infrastructure and expertise in what the attorneys describe as a “de facto merger.”

This is despite the fact that Musk touts that data from X provides xAI with an advantage compared to other AI rivals.

Last month, X changed its privacy policy to allow third parties, including xAI, to train models on X posts.

Colossus AI supercomputer

Meanwhile xAI has pledged to expand its Colossus supercomputer tenfold to incorporate more than 1 million graphics processing units, in an effort to leap ahead of rivals such as Google, OpenAI and Anthropic.

Colossus was built in just three months earlier this year, and is said to be the world’s largest supercomputer, operating a cluster of more than 100,000 interconnected Nvidia GPUs.

The chips are used to train Grok.

Work has reportedly already begun to increase the size of the facility in Memphis, Tennessee, according to a statement from the Greater Memphis Chamber on Wednesday.

Additionally, Nvidia, Dell, and Supermicro Computer (SMC) will be establishing operations in Memphis.

“In Memphis, we’re pioneering development in the heartland of America,” xAI’s Brent Mayo declared. “We’re not just leading from the front; we’re accelerating progress at an unprecedented pace while ensuring the stability of the grid utilizing megapack technology.”

The chamber of commerce also said it would establish an “xAI special operations team” to “provide round-the-clock concierge service to the company”.