Preface:

Since Anthropic's Claude 3 Opus, Llama-3, and Google Gemini, competition has become even more intense.

In a sense, xAI may already be among the top ten startups in the field of generative AI model construction and is approaching the top five.

Author | Fang Wensan

Image Source | Network

Musk's xAI Completes $6 Billion Series B Financing

Just now, Musk's xAI company announced the completion of the largest venture capital investment this year, successfully obtaining a Series B financing of up to $6 billion, with a valuation exceeding $24 billion.

This move marks a further escalation in the competition in the field of large models in Silicon Valley, and xAI has officially entered the first tier of the industry, forming a new quadruple-giant structure together with OpenAI, Google, and Anthropic.

Last year, the computing power demand in the field of large models was still at the level of 10,000 NVIDIA H100 computing power clusters, however, in just one year, this threshold has significantly increased to at least 100,000 H100.

The $6 billion raised by xAI this time will mainly be used to meet this rapidly growing computing power demand.

In a call with potential and existing xAI investors, Musk revealed that the company plans to use most of the funds to rent AI chips and strive to achieve the goal of having 100,000 GPUs by the second half of 2025 to further promote the upgrading and optimization of core technologies such as the Grok model.

Last month, Musk clearly stated in a live audio chat on the X.com platform that training the Grok 3.0 model at xAI will require up to 100,000 NVIDIA H100 GPUs.

He also revealed that the current Grok 2.0 model is already being trained on approximately 20,000 H100 chips.

As part of the Series B financing announcement, xAI emphasized that it will continue to maintain a rapid development momentum in the coming months and plans to release several eye-catching technological updates and products.

The funds raised from this financing will be mainly used to promote the marketization process of xAI's first batch of products, build leading infrastructure, and accelerate the research and development of future technologies.

xAI has always been committed to developing advanced AI systems that are realistic, efficient, and have maximized value for human society. The company's core mission lies in deeply exploring the true nature of the universe.

Musk hailed xAI's brand-new AI supercomputer as a "computer gigafactory" and personally took on the "personal responsibility" of ensuring the timely delivery of the supercomputer, highlighting the importance of the project in the development process of large language models.

The competition between xAI and OpenAI has become one of the focuses in the field of AI basic models, while some emerging AI startups in China, such as Moonshot AI, have also shown strong development momentum in this field.

According to the announcement, the main uses of the financing funds include promoting the market landing of xAI's first batch of products, building cutting-edge infrastructure, and accelerating the research and development process of future technologies.

The "Supercomputing Gigafactory" becomes the biggest selling point after Musk

According to an investor interviewed by The Information, Musk recently made it clear in communications with potential and existing xAI investors:

The company will focus on using funds to lease AI chips, aiming to achieve the construction goal of a "gigafactory of compute" and is expected to be completed and put into operation before the fall of 2025.

In addition, the company may also seek cooperation with Oracle.

This upcoming supercomputer is planned to use up to 100,000 NVIDIA flagship H100 GPUs, which will be at least four times larger than the current largest GPU cluster, aiming to optimize the model performance behind Grok.

In the process of advancing the "supercomputing gigafactory" project, the possibility of cooperation between XAI and Oracle exists, but other partners or forms of cooperation may also be chosen.

It is worth noting that the participants in this round of financing include funds such as Sequoia and A16Z, but Oracle's presence is not seen.

This phenomenon is particularly prominent compared to other large cloud service providers and large model companies that "lock in" cloud customers through investment.

Musk's xAI supercomputer project, based on NVIDIA H100 chips, will build an unprecedentedly large data center.

The construction of this "computer gigafactory" may have substantial impacts on its other subsidiaries.

It is expected that this massive data center will complete its preparations by the fall of 2025 and is expected to be officially put into use in early 2026.

Musk said that he expects to achieve the operation of this supercomputer by the fall of 2025, indicating that the project's timeline is very tight.

Overall, the advancement of the "supercomputing gigafactory" project has won valuable opportunities for Grok in the AI computing power competition, but the competition will continue to intensify, and all parties will continue to increase their investment to consolidate and expand their dominant position.

Single financing round approximately equals half of OpenAI's decade-long financing

xAI recently successfully raised financing of up to $6 billion, a sum that is considered outstanding among AI startups.

In comparison, OpenAI has accumulated financing of $14.3 billion over the past decade, while Anthropic, as a strong competitor of OpenAI, has also received over $7 billion in funding support.

This injection of huge funds will greatly promote xAI to accelerate the development and iteration process of its chatbot Grok, ensuring its strong competitiveness in the field of AI large models;

keeping pace with industry leaders such as OpenAI's GPT, Meta's Llama, Anthropic's Claude, and Google's Gemini.

Judging from the financing situation of major giants and the positive response of investors, the upsurge in AI computing power construction has far from subsided, but rather, more and more funds are pouring into this field.

In the capital market, OpenAI's total financing has exceeded $14 billion, with a valuation of up to $100 billion.

As a powerful competitor of OpenAI, xAI has obtained nearly half of OpenAI's total financing in less than a year since its establishment, fully demonstrating the high recognition and expectations of the investment community towards Musk's tremendous potential in the field of large models.

According to foreign media reports, the lineup of investors in this $6 billion round is quite luxurious, including Musk's long-time partner Valor Equity Partners, the first investor in Tesla and SpaceX, as well as the powerful Dubai investment company Vy Capital.

It is worth mentioning that OpenAI's investors Sequoia Capital and a16z are also among them.

This situation is not difficult to understand. On the one hand, as the Silicon Valley giants invest heavily in the research and development of the next generation of AI models, the commercialization of AI technology is also imminent;

on the other hand, OpenAI's internal disputes continue, and capital parties naturally do not want to see it dominate the market.

In addition to this considerable $6 billion financing, Musk's confidence also comes from his good cooperative relationship with NVIDIA.

In NVIDIA's recent earnings conference call, when discussing the customer list for its next-generation flagship chip Blackwell, besides industry giants like OpenAI, Amazon, and Google, NVIDIA specifically mentioned Musk's xAI.

Facing Musk's offensive, OpenAI quickly raised its defenses

xAI can be viewed as a general AI, showing a relatively active attitude in terms of updates and iterations.

Since its establishment in July 2023, by November of the same year, it had already launched the Grok-1 model, which is only available to paid subscribers.

Subsequently, in March 2024, xAI decided to open source Grok-1 and simultaneously released the optimized Grok-1.5 version.

Just a month later, xAI again upgraded its product, introducing the Grok-1.5V multimodal model capable of processing text, images, documents, and table content, demonstrating its strong technical strength and innovation speed.

Recently, Musk publicly stated that xAI plans to promote the Grok model through multiple sales channels, including Tesla, and specifically pointed out that autonomous driving will be the most critical application area for Grok.

This strategic deployment undoubtedly outlines a grand blueprint for the future development of xAI.

Meanwhile, OpenAI is also actively advancing its research and development of cutting-edge technologies.

On May 29, OpenAI announced on its official website that it has begun training the next-generation leading model, aiming to achieve a higher level of artificial intelligence capabilities, thereby driving its continuous progress towards general artificial intelligence (AGI).

Immediately afterwards, on May 30, OpenAI announced again that all free users of ChatGPT can now enjoy advanced features such as browsing, vision, data analysis, file uploads, and GPTs that were previously only available to paid users.

This move not only improves the popularity and user experience of ChatGPT but also indicates that OpenAI will reserve even more powerful functional reserves for paid users.

According to The Information, Microsoft and OpenAI have reached a consensus to invest more than $100 billion over the next five years to build a data center project.

This project will include an AI supercomputer named "Stargate," which will be equipped with millions of dedicated server chips, aiming to provide powerful computing support for OpenAI to achieve general artificial intelligence.

This significant investment will undoubtedly accelerate OpenAI's research and development progress in the field of artificial intelligence, pushing it towards higher levels of technological innovation.

Conclusion:

In the short term, Musk's successful financing of $6 billion has indeed allowed xAI to enter the first tier of the industry.

However, given Musk's reputation in the AI field and the fierce competition in the AI startup field, his involvement in the AI field has far from gained widespread recognition.

At the same time, the high valuation given to xAI may only remain on paper in the future, becoming a superficial wealth.

Some references: Geek Park: "Musk's xAI Raises $6 Billion in Financing, Preparing to Compete with OpenAI," ZhiDongXi: "Financing of $130 Billion! Musk's xAI Surpasses OpenAI!", Tencent Technology: "With Money, Data, Chips, and Musk, Can xAI Overthrow OpenAI?" 36Kr: "Musk's xAI Raises Another $6 Billion in Financing, Planning to Build a 100,000 H100 Cluster to Challenge Google and OpenAI"