Musk’s A.I. Firm Raises $6 Billion in Race With Rivals

Elon Musk’s artificial intelligence company, xAI, said on Sunday that it has raised $6 billion, helping to close the funding gap with OpenAI, Anthropic and other rivals in the red-hot industry.

The funds would be used “to take xAI’s first products to market, build advanced infrastructure, and accelerate the research and development of future technologies,” the company said in a statement.

Mr. Musk, who founded xAI in July, said in a social media post the funding round valued the company at $18 billion, not including the new money. Investors included the Silicon Valley heavyweights Andreessen Horowitz and Sequoia Capital, along with Saudi Arabia’s Prince Alwaleed bin Talal.

Investors and large tech companies like Google, Meta and Microsoft have poured billions into the businesses developing A.I. systems, looking to profit as they’re integrated into many aspects of business and daily life. These investments also reflect the steep costs of running generative A.I. systems, which require huge amounts of processing power to generate text, sounds and images.

In a recent research report about the latest developments in A.I., analysts at Deutsche Bank noted that “the constant improvements to already strikingly powerful generative A.I. models show how the technology has rapidly become table stakes for the industry leaders.” They said that the major players in the industry could not “afford to fall behind in the early jostling before market positions are entrenched.”

OpenAI, which unveiled the chatbot ChatGPT in late 2022, has roughly tripled its valuation over the past year or so, to $80 billion, with some $13 billion in backing from Microsoft. Anthropic, which was founded in 2021, has raised roughly $8 billion, much of it from Amazon, and reached a valuation of about $15 billion. Tech giants like Google and Meta have also spent heavily on their own A.I. technologies, which are quickly being incorporated across their product lineups.

(The New York Times sued OpenAI and Microsoft in December, claiming copyright infringement of news content related to A.I. systems.)

Mr. Musk, who also runs Tesla, SpaceX and other businesses, was a co-founder of OpenAI in 2015, but later split from the company as he became disillusioned with its direction — and the A.I. industry in general.

He sued OpenAI and its chief executive, Sam Altman, in March, accusing them of breaching a contract by putting profits and commercial interests in developing artificial intelligence ahead of the public good. That same month, Mr. Musk released the raw computer code behind xAI’s chatbot, an escalation in the heated debate over whether open-sourcing these systems’ code could make them safer, or invite misuse.

Last week, during a remote appearance at a technology conference in Paris, Mr. Musk said that xAI “still has a lot of catching up to do” to be competitive with the technology from OpenAI and Google. “Maybe towards the end of this year we will have that.”

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Kim browne

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