Weeks after its last funding round, xAI Holdings Corp. is reportedly in talks to raise new capital at a valuation of $170 billion to $200 billion.
The Financial Times today cited sources as saying that Saudi Arabia’s PIF sovereign wealth fund is expected to play a “large role” in the investment. It’s unclear who are the other investors in the round or how much xAI is seeking to raise.
Earlier this month, the Elon Musk-backed artificial intelligence company raised a $5 billion funding round and the same amount in debt. It previously closed a $6 billion investment in November that valued it at $50 billion.
That xAI’s valuation is now reportedly poised to reach as much as $200 billion might be a sign of investor optimism about its technology. On Thursday, the company introduced a new flagship large language model called Grok 4. The algorithm set records across several artificial intelligence benchmarks known for their difficulty.
In a blog post accompanying the launch, xAI engineers detailed that the company enhanced its compute infrastructure while building Grok 4. The AI developer claims that the efficiency of its training workflows has increased by a factor of six as a result. The upgrade may have boosted investor confidence in xAI’s ability to compete with rivals such as OpenAI.
According to the Financial Times, xAI plans to spend $18 billion on expanding its compute infrastructure. The company trains its models using a supercomputer called Colossus that is located in Memphis. Earlier this year, Musk stated that xAI plans to increase the number of graphics cards in the system from 200,000 to 1 million.
The company sells access to its Grok LLM series via an application programming interface and consumer-focused subscriptions. Last month, Bloomberg reported that xAI expects those offerings to generate $500 million in revenue this year. The company estimates that its annual sales will jump to $19 billion by 2029.
One way xAI plans to maintain its revenue growth is by launching new products. During the X live stream in which Grok 4 was announced this week, Musk said that the company is working on versions of the model optimized for video generation and coding tasks.
The company will likely face tough competition in the coding automation market. Shortly after rumors of xAI’s fundraising push emerged today, programming assistant developer Windsurf Inc. announced that its two co-founders and several engineers will join Google LLC. The Alphabet Inc. will also license technology from the company, which recently received a $3 billion takeover offer from OpenAI.
Image: xAI
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