xAI's value is set to double, joining Elon Musk's Tesla and SpaceX in reaching new heights
Two of Elon Musk’s private ventures are set to be worth a lot more, joining his sole public company in securing massive valuations.
His artificial intelligence startup, xAI, is raising up to $6 billion at a $50 billion valuation, CNBC reports, citing anonymous sources. Five billion dollars are expected from sovereign funds in the Middle East, while the remainder comes from domestic investors.
The Financial Times previously reported that Musk had approached investors in Qatar and Saudi Arabia about backing the startup, which he launched last July as a competitor to Sam Altman’s OpenAI, as well as current investors like Sequoia Capital and Valor Equity Partners. At the time, a $45 billion valuation had been floated.
If the deal closes, it would more than double the $24 billion valuation xAI reached in May, when the company announced it had raised $6 billion from backers like Andreessen Horowitz and Saudi Arabian investor Prince Alwaleed bin Talal.
The new funds are expected to go toward the acquisition of 100,000 Nvidia (NVDA) chips, CNBC reports. xAI in October won approval to expand its Colossus supercomputer in Memphis, Tennessee, which is expected to help train Tesla’s (TSLA) AI tech, including Full Self-Driving.
And SpaceX, Musk’s aerospace company that plans to test a mega-rocket on Monday, is also looking to raise cash.
The largest private company in the U.S. plans to launch a tender offer next month to sell existing shares at about $135 a pop, according to the Times, citing people who are knowledgeable about the discussions. With that reported offer, SpaceX would be valued at $250 billion, up from $210 billion earlier this year. It would also make it worth more than Bytedance, the company behind TikTok and the most valuable startup in the world.
Both startups are likely to benefit from Musk’s tight-knit relationship with President-elect Donald Trump, who on Tuesday handed Musk an advisory board to recommend ways to slash regulations and federal spending. He’s already signaled that he will use that job to try and benefit his companies.
On Friday, he agreed with investor Ron Baron’s comments that regulations should be changed so that companies don’t need to repeatedly get permits to launch rockets. He previously said he would work to streamline federal regulations for driverless vehicles, which Tesla is working on. Musk is widely expected to play a role in guiding the Trump administration’s AI initiatives.
It’s easier to see what effect that relationship has on Tesla, given that it’s a public company. Since its CEO’s big bet on Trump paid off, the stock has boomed, reaching a $1 trillion valuation and surging above $300 per share for the first time since 2022.
— Britney Nguyen contributed to this article
