Elon Musk’s artificial intelligence firm, xAI, has met with investors about a funding round that could value the company at around $40 billion, The Wall Street Journal reported, as xAI tries to keep up with increasingly higher valuations at rival companies such as OpenAI.

xAI raised $6 billion this spring. (Photo by Muhammed Selim Korkutata/Anadolu via Getty Images)

Anadolu via Getty Images

Key Facts

xAI is looking to raise several billion dollars in the upcoming funding round, according to the Journal, which noted the cash raised would tack on to the $40 billion valuation.

The funding round could mark a $16 billion increase in value for xAI, as its $6 billion round in the spring brought its valuation to $24 billion.

The Journal reported the funding discussions are in their early stages, indicating a deal could still potentially fall through or be subject to changes.

xAI did not immediately respond to Forbes’ request for comment.

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Xai Vs. Openai

If xAI’s funding round ends up bringing the startup’s valuation to around $40 billion, the figure will still pale in comparison to the value of ChatGPT parent OpenAI, the Microsoft-backed AI firm that raised $6 billion early this month and brought its valuation to $157 billion. Musk co-founded OpenAI in 2015, left a few years later and has since become one of the company’s largest critics, going so far as to accuse OpenAI in a federal lawsuit of prioritizing commercial interests over its mission to “benefit humanity.” OpenAI requested the lawsuit be thrown out this month, saying Musk was waging an “increasingly blusterous campaign to harass OpenAI for his own competitive advantage.” Despite OpenAI’s larger fundraising numbers, the company’s CEO, Sam Altman, has reportedly expressed concern to Microsoft executives that xAI, which recently built a supercomputer in Memphis, could soon have more access to computing power than OpenAI, according to The Information.

Forbes Valuation

We estimate Musk’s net worth at $268.7 billion, making him the wealthiest person in the world ahead of Oracle co-founder Larry Ellison ($211.3 billion) and Amazon founder Jeff Bezos ($208.1 billion).

Key Background

xAI’s latest funding round was backed by investors such as Andreessen Horowitz, Sequoia Capital and Fidelity. The AI startup—known partly for its “Grok” chatbot linked to Musk’s social media platform X—said the cash would be used to bring its first products to market and accelerate research, noting in a statement it was hiring for “numerous roles” (the company’s careers page suggests it is still in hiring mode). xAI has continued growing since the funding round, most notably constructing a massive data center in Memphis this summer that gives the startup a massive boost in computing power. The data center can run all 100,000 advanced Nvidia chips at the same time, according to Semafor, which noted the milestone means xAI can train its AI model with historically unprecedented computing power.