Elon Musk’s xAI raising up to $6 billion to purchase 100,000 Nvidia chips for Memphis data center

Elon Musk’s artificial intelligence company xAI is raising up to $6 billion at a $50 billion valuation, according to CNBC’s David Faber.

Sources told Faber that the funding, which should close early next week, is a combination of $5 billion expected from sovereign funds in the Middle East and $1 billion from other investors, some of whom may want to re-up their investments.

The money will be used to acquire 100,000 Nvidia chips, per sources familiar with the situation. Tesla‘s Full Self Driving is expected to rely on the new Memphis supercomputer.

Musk’s AI startup, which he announced in July 2023, seeks to “understand the true nature of the universe,” according to its website. Last November, X.AI released a chatbot called Grok, which the company said was modeled after “The Hitchhiker’s Guide to the Galaxy.” The chatbot debuted with two months of training and has real-time knowledge of the internet, the company claimed at the time.

With Grok, X.AI aims to directly compete with companies including ChatGPT creator OpenAI, which Musk helped start before a conflict with co-founder Sam Altman led him to depart the project in 2018. It will also be vying with Google’s Bard technology and Anthropic’s Claude chatbot.

In early 2023, Musk reportedly secured thousands of high-powered graphics processing units (GPUs) from Nvidia, the kind of chips necessary to build a large language model.

This story is developing. Check back for updates.