Elon Musk’s xAI Targets $10 Billion Raise at Staggering $200 Billion Valuation
Musk's AI venture rockets toward historic funding milestone—defying conventional startup trajectories and investor skepticism alike.
The Valuation Gambit
xAI's proposed $200 billion valuation would instantly position it among the world's most valuable private companies—despite having yet to demonstrate commercial viability at scale. The move echoes Musk's signature playbook: ambitious pricing, celebrity founder appeal, and a narrative that often outpaces operational reality.
Market Mechanics
The $10 billion fundraise would inject substantial capital into AI infrastructure development, likely accelerating compute resource competition and talent acquisition wars. Previous Musk ventures have followed similar high-stakes funding patterns—initial skepticism followed by aggressive execution timelines.
Investor Calculus
Backers appear to be betting on Musk's track record of disrupting industries—from electric vehicles to space exploration—while discounting traditional valuation metrics. The round's structure and lead investors remain undisclosed, though sovereign wealth funds and institutional tech backers are likely participants.
Because nothing says 'reasonable valuation' like pricing a pre-revenue AI startup at twice the market cap of Intel—what could possibly go wrong?
xAI joins X, Grok stumbles, AI chips flood in
In March, Elon merged xAI into X, his renamed version of Twitter, in an all-stock deal. That MOVE valued xAI at $80 billion and X at $33 billion. Remember, Elon bought Twitter for $44 billion in 2022, rebranded it, and now it’s one big chaotic playground for everything; from news to Grok, his AI chatbot.
Speaking of Grok, let’s talk about the mess. The bot made headlines for praising Adolf Hitler and attacking Jewish people. In another case, it spit out unrelated answers about “white genocide” and South Africa. These weren’t isolated bugs.
They exposed a lack of proper safety controls, and the backlash was immediate. Users and critics slammed it. Yet Grok still sits inside X, trying to play catch-up with OpenAI’s GPT models and Anthropic’s Claude. And it’s not doing a great job of that. Grok has fewer users, weaker capabilities, and way more controversy.
Now Elon wants to spend the new funds on hardware, mainly GPUs. In May, he said he plans to buy 1 million AI chips. Faber added that most of the money will likely go into building massive data centers with Nvidia and AMD chips.
One of these clusters is already going up in Memphis, Tennessee. This also means hiring pricey engineers to run all this next-gen infrastructure. GPUs don’t run themselves.
OpenAI poaches xAI’s CFO, feud with Altman deepens
There’s drama behind the scenes, too. Mike Liberatore, who joined xAI as finance chief earlier this year, quietly left after three months. Now he’s at OpenAI. A company spokesperson allegedly said Mike starts on Tuesday and will report to CFO Sarah Friar. He’s also going to work with Greg Brockman’s team, handling OpenAI’s compute spending and contracts.
This comes right in the middle of Elon’s legal fight with OpenAI. He sued CEO Sam Altman and the company last year, accusing them of violating their original nonprofit agreement. The two men co-founded OpenAI together in 2015, but things have gone south. Fast. Now they’re bitter rivals.
OpenAI isn’t slowing down, though. It’s planning a full pivot to a for-profit structure, while still being partially overseen by its nonprofit parent. That parent now holds equity worth over $100 billion. And yes, OpenAI is still making huge moves. They’ve locked in a $300 billion deal with Oracle to secure more computing power.
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