Elon Musk's XAI May Pursue New Funding Round Valuing Company Between $170 Billion And $200 Billion

Elon Musk's AI startup xAI is considering a new funding round potentially valuing the company at $200 billion, despite Musk stating it has ample capital. Saudi Arabia's Public Investment Fund may play a key role in this funding.

Elon Musk's AI startup, xAI, is reportedly preparing for a fresh funding round. This could potentially value the company between $170 billion and $200 billion, as per a Financial Times report. The report cites sources familiar with the ongoing discussions. However, Musk has stated on his social media platform X that "xAI is not seeking funding right now. We have plenty of capital."

Earlier this year, xAI made headlines by acquiring X, the social media platform previously known as Twitter. This acquisition valued xAI at $80 billion and X at $33 billion. Musk had launched xAI in July 2023 to compete directly with OpenAI's ChatGPT. Meanwhile, OpenAI is also pursuing a significant funding round, aiming for up to $40 billion at a $300 billion valuation.

Saudi Arabia's Potential Involvement

Saudi Arabia's Public Investment Fund (PIF) is expected to be a key participant in the potential funding round for xAI. The sovereign wealth fund already holds an indirect stake in xAI through its investment in Kingdom Holding Company. This company has invested $800 million in Musk's AI venture.

The FT report highlights that discussions about the funding are still in early stages, and the final terms may change. At the time of reporting, PIF had not responded to Reuters' request for comment regarding their involvement.

xAI's Financial Projections

According to Bloomberg News figures from June, sourced from Morgan Stanley, xAI projects over $13 billion in annual earnings by 2029. For this year alone, they anticipate generating $1 billion in gross revenue. To support its ambitious growth plans, xAI intends to invest $18 billion in data center infrastructure over the coming years.

In June, Morgan Stanley revealed that xAI completed a $5 billion debt raise alongside an additional $5 billion strategic equity investment. These funds aim to bolster the company's efforts to expand its AI infrastructure by building new data centers amid the global race for AI dominance.

Musk's statement on social media suggests confidence in xAI's current financial position despite reports of potential new funding rounds. The company's focus remains on expanding its capabilities and infrastructure as it competes with other major players in artificial intelligence.