Elon Musk's xAI scores $6B in its series B funding round

Investors continue to buy into the AI hype

Elon Musk's xAI has announced a series B funding round of $6 billion that takes the company to a valuation of $24 billion, according to the billionaire.

Musk posted on X that "pre-money valuation was $18 billion."

xAI has been on quite the journey since the company was announced in July 2023. Grok-1 turned up in November, and the model that resides behind the chatbot has since been released as open source.

Grok-1.5V, the company's first attempt at a multimodal model that can process visual information as well as text, was announced last month. We noted at the time that critics say it has relatively lackluster performance in benchmarks compared to its rivals, although it is early days.

As for the funding, the figures might seem eye-popping, but the AI world is awash with cash at the moment, prompting all too many vendors to slap the special letters on all manner of products. Tim Hockin, a Google veteran and one of the minds behind the Kubernetes container orchestration tech, told The Register in 2023 "There's no magic, there's no pixie dust you can sprinkle on something and say 'now with AI!'"

And yet the cash has continued to roll in. Microsoft is said to have spent upwards of $10 billion so far on OpenAI, for example, and financial analysts have been showering it with buy ratings as investors sent its stock price soaring. However, Meta was punished by an immediate stock plunge after Mark Zuckerberg's admission that it might take time before AI technology begins paying back the huge investments being made in the services.

So, should companies such as OpenAI be worried about the threat from xAI? Probably not. Although Grok benefits from real-time access to the contents of the X.com platform, Simon Baxter of TechMarketView observed: "The chatbot is also playful, humorous and sarcastic, which has made it a somewhat controversial choice, certainly not one you would build your business around, unlike GPT.

"In my view, it will take a Herculean effort for xAI to even catch up to OpenAI, and even then, I'm not sure the approach taken with Grok will appeal to the majority of organizations."

The generative AI marketplace is evolving at speed, and the competition is intense. OpenAI's latest multimodal model, ChatGPT-4o, was released earlier in May, and reportedly responds to audio input far better than previous models.

Musk has grand plans for Grok and xAI, and according to reports, he plans to build a supercomputer capable of handling the workloads of the next version of Grok.

Baxter said, "It seems that plenty of heavy hitters agree with his vision, though I would personally have invested my $6 billion elsewhere." ®

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