By Adam Clark
Elon Musk's artificial-intelligence start-up xAI has raised another $6 billion to take the fight to its AI rivals. Advanced Micro Devices and Nvidia's role in the fund-raising is a reminder of the complicated relationship between chip makers and their clients.
Musk's xAI gave details of the funding round and its backers, which included AMD and Nvidia on Monday. The total amount was larger than previous reports which suggested xAI had raised $5 billion at a valuation of $50 billion.
The firm also got backing from U.S. venture capitalists and investment funds from Saudi Arabia and Qatar among others.
Nvidia and AMD's participation in xAI's funding round means they are directly financing a rival to their major customers including Microsoft, Alphabet's Google, Meta Platforms and Amazon.com.
That might seem surprising but it makes sense for the chip companies to keep their options open. Each of the four big tech companies -- often referred to as 'hyperscalers' -- are developing their own in-house processors with the help of companies such as Broadcom and Marvell Technology.
Keeping close ties with xAI and Tesla CEO Musk means AMD and Nvidia will have a willing buyer even if their other clients seek to rely more on custom chips. It also means they can showcase the potential superiority of their technology for training and implementing the most advanced AI models.
Musk's xAI is planning to incorporate a minimum of one million graphics-processing units (GPUs) at its supercomputer facility in Memphis, Tenn., according to a recent statement from the city's chamber of commerce. The company has already said it intends to have a total of 200,000 of Nvidia's Hopper AI chips, which were used to train the first two versions of its Grok AI model.
So far xAI hasn't been a major competitor when it comes to offering AI services. The start-up recently told investors its revenue is on pace to surpass $100 million annually, according to The Wall Street Journal. OpenAI expects to bring in nearly $4 billion of revenue this year.
However, that could change if Musk's bet on building the largest AI data centers pays off with killer applications of the technology.
"Grok 3, is currently training and we are now focused on launching innovative new consumer and enterprise products," xAI said in a statement announcing its latest funding round.
Write to Adam Clark at adam.clark@barrons.com
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
December 24, 2024 09:53 ET (14:53 GMT)
Copyright (c) 2024 Dow Jones & Company, Inc.
Comments