Elon Musk’s post-election news is almost routine, but even for Elon, this week’s headlines are full of staggering numbers: his $100 billion-plus Tesla pay package was canceled, SpaceX is reportedly close to a valuation of $350 billion, and its rivalry with OpenAI – the nonprofit he co-founded – has grown again.
Abandon all others
Last Friday, Musk filed an injunction to stop OpenAI’s for-profit transition, accusing it of orchestrating a “group boycott” who blocked funding for his own AI company, xAI. In October, the Financial Times reported that OpenAI had discouraged investors from backing rival AI startups in its last funding round.
But even if Sam Altman and co. forced investors to commit to monogamy and invest only in OpenAI, it wouldn’t exactly say that xAI had trouble finding backers.
Sherwood News
In just 16 months since its July 2023 launch, xAI has grown ~$11 billion – a step that took OpenAI about eight years and Amazon-backed Anthropic almost four years. Indeed, xAI’s latest financing round propelled its valuation to 50 billion dollars, according to at the Wall Street Journal. This exceeds Anthropic’s valuation of $19 billion and the valuations of public heavyweights like Ford ($43 billion), Kroger ($43 billion), and Lululemon ($42 billion). It’s also more than Musk’s $44 billion paid for X just two years ago.
Why this rush for cash?
In 2024, if you want to be competitive in AI, you must be prepared to invest billions in the physical domain. thing – AI chips and data centers: xAI’s last $5 billion will be partially funds purchasing 100,000 Nvidia chips for its recently completed data center in Memphis. Meanwhile, Anthropic is on its way to build one of the largest AI supercomputers in the world, and OpenAI is expansion its presence in the Midwest and Southwest of the United States.
According to McKinsey & Company’s October report researchdemand for AI-specific data centers is expected to grow 33% annually through 2030 and could ultimately account for 70% of global data center demand. TL;DR: AI is an expensive game, and xAI is leaning heavily on Musk’s name to compete.