Elon Musk's xAI raises $5 billion, doubling valuation to $50 billion

This latest investment brings xAI’s total fundraising for the year to $11 billion.

Earlier in the spring, the company raised $6 billion, valuing it at $24 billion—a figure that has more than doubled with the latest round. 

The newly raised funds will be used to acquire an additional 100,000 Nvidia chips to enhance the training of xAI’s advanced AI models, the report stated. 

In October, it was reported that xAI aimed to raise several billion dollars in a funding round targeting a valuation of approximately $40 billion.

The eventual outcome surpassed those expectations. 

In September, the company unveiled the Colossus 100k H100 training cluster, which Musk described as “the most powerful AI training system in the world.”

Musk also announced plans to double its size to 200,000 units, incorporating 50,000 Nvidia H200 chips in the coming months. 

The H200 is a cutting-edge Nvidia GPU designed to accelerate generative AI and large language model training.

Nvidia’s Data Center division has lauded xAI’s Colossus as “the world’s largest GPU supercomputer,” highlighting the speed with which it became operational. 

The surge in xAI’s valuation reflects broader trends in the AI sector.

AI startups collectively raised $11.8 billion in the third quarter of 2024 and $53 billion year-to-date, according to data from Crunchbase. 

Despite recent market fluctuations, venture capital interest in AI remains strong.

Stocklytics noted that while investors are becoming more selective, the sector is viewed as a long-term growth opportunity. 

Enterprise spending on generative AI has also surged, rising sixfold from $2.3 billion in 2023 to $13.8 billion in 2024, according to Menlo Ventures. 

“2024 marks the year that generative AI became a mission-critical imperative for enterprise,” Menlo Ventures Partner Joff Redfern stated in a press release. “Organizations are moving beyond pilots and embedding AI at the core of their business strategies.” 

With its significant funding and ambitious plans for technological expansion, xAI is poised to play a pivotal role in this rapidly growing sector.