Elon Musk's xAI raised multibillion-dollar funding to upgrade its supercomputer infrastructure.
Elon Musk's xAI Corp. is raising a multibillion-dollar funding round that will significantly increase its valuation. According to CNBC, the investment is worth up to $6 billion and should close early next week, with the bulk of the capital—$5 billion—provided by sovereign funds in the Middle East, while the rest comes from other investors. The deal is expected to value xAI at $50 billion. The Financial Times reported that xAI has already raised $5 billion through the fundraising effort, citing sources that valued the company at $45 billion—lower than CNBC's estimate but still $21 billion higher than its valuation after the previous funding round in May.
Musk launched xAI last year to compete with OpenAI in the large language model space. The company debuted its first LLM, Grok, last November, and has since released the LLM under an open-source license while introducing several newer, proprietary models with more advanced capabilities. The company's latest LLM, grok-beta, debuted earlier this month and can process prompts with up to 128,000 tokens and interact with other applications.
To support its AI development efforts, xAI has built a supercomputer in Memphis that features 100,000 of Nvidia Corp.'s H100 graphics cards. The system, known as Colossus, came online in September and includes the chipmaker's SN5600 Ethernet switches and an Nvidia processor called the BlueField-3 to perform certain infrastructure management tasks. CNBC reported that xAI will likely use its latest funding round to deploy 100,000 more GPUs in its Memphis data center. Last month, Musk announced plans to expand Colossus with 100,000 more chips "soon," with half of the new chips expected to be H200s, which are more advanced than the H100 GPUs currently powering Colossus. The H200 features 80% more memory than its predecessor along with 40% higher memory bandwidth, an improvement that allows data to more quickly move between the GPU's logic circuits and onboard RAM and can significantly boost LLM performance.
According to CNBC's sources, the upgraded supercomputer will help power Tesla Inc.'s Full Self Driving software, a suite of partly autonomous driving features that the automaker ships with some of its vehicles. A car equipped with Full Self Driving can automatically switch lanes, park, stop at red lights, and perform related tasks. The upgraded supercomputer will presumably also support xAI's own AI development efforts, enabling the company to build LLMs with more advanced capabilities.
The hardware upgrade comes as OpenAI is reportedly also working to expand its AI development infrastructure. According to The Information, the ChatGPT developer and Microsoft Corp. are currently in the third stage of a five-phase supercomputer construction project, with the initiative expected to see the companies build a system with millions of AI processors by 2028.