In what might be a tangentially useful transfer for X, xAI is reportedly in superior talks on a brand new funding spherical, which might search a further $15 billion in fairness, at a valuation of $230 billion for the xAI undertaking.
Which is a giant soar from the $113 billion valuation that X shared again in March, when xAI acquired X the app. That acquisition instantly diminished the strain on X’s flailing advert enterprise, as a result of xAI’s funding might now be used to additionally help X, as a key information supplier, inside the scope of the xAI undertaking.
However on the identical time, xAI is costing a heap of cash, with studies suggesting that Elon’s AI undertaking is burning by way of $1 billion or extra every month, because it builds out its information heart infrastructure to help its ambitions.
That might imply that xAI has a extra restricted runway than many anticipate. And with few earnings streams for the undertaking as but, it might nonetheless crumble, even when X does acquire this new money injection.
According to Bloomberg’s reporting again in June, xAI is on monitor to generate round $500 million in income in 2025, which is able to rise to $2 billion in 2026, by way of expanded AI entry and partnerships.
Although what precisely these partnerships and offers are, we don’t know as but. What we do know is that xAI is making some cash by way of Grok subscriptions (starting from $30 to $300 per thirty days), whereas it’s additionally signed some offers with authorities departments and different teams to help evolving AI infrastructure wants.
Initially, it had appeared that xAI’s most definitely pathway to revenue can be by way of authorities offers, with Elon utilizing the information he gleaned about authorities programs through his DOGE undertaking to then construct AI options that might be embedded into these processes.
However then Elon had a public falling out with President Trump, and it appeared like perhaps he’d misplaced that chance, although xAI has nonetheless signed authorities contracts since then, whereas Musk and Trump seem to have made up after their spat.
So perhaps, that’s the place the cash will come from, but even so, $230 billion, for a corporation wanting to herald $500 million this 12 months, is a loopy a number of.
But, it’s additionally Elon Musk, and lots of people are seemingly keen to spend money on the parable of Musk as a lot because the manufacturing, based mostly on his lengthy historical past of guarantees unfulfilled, which have seemingly had little affect on his standing.
On the identical time, xAI has additionally confirmed that it’s constructing new information facilities in Saudi Arabia, because of Musk’s latest assembly with Saudi officers in Washington.
As per xAI:
“At the moment, xAI is proud to announce a landmark framework settlement with Kingdom of Saudi Arabia and HUMAIN, a PIF firm targeted on full-stack AI options. Collectively, we are going to design, construct, and function a brand new era of low-cost, hyperscale GPU information facilities within the Kingdom of Saudi Arabia.”
xAI may also be deplying its Grok AI chatbot to Saudi Arabian customers, whereas Grok may also combine into HUMAIN’s agent platform, HUMAIN ONE, “bringing real-time intelligence, autonomous workflows, and superior AI copilots to authorities, enterprises, and society at massive.”
So Musk is increasing his ties to Saudi billionaires, who’re additionally traders in X (and probably the rationale why U.S. regulators gained’t approve X’s cash transmitter license).
Musk has additionally raised the potential for his predominant money-making firm, Tesla, investing in xAI, as a part of a broader imaginative and prescient to deliver AI to all components of his tasks.
So there are funding avenues out there to the undertaking, although even then, with no viable, tangible pathway to monetization, I doubt that xAI might justifiably be value a lot.
However Musk is tremendous eager on AI, labelling it a key expertise for the evolution, and salvation, of human type.
Musk has made numerous wild claims on this entrance, together with that AI and humanoid robots will “eradicate poverty.”
There’s fairly a couple of steps to fill in there between “invent AI-powered robots” and “eradicate poverty,” however once more, Musk is famend for imagining radical, science fiction-inspired futures, which can or could not ever come to be.
I imply, proper now, with the discharge of the most recent Grok mannequin, he appears to be extra enamored with the thought of producing photos of sizzling anime ladies than anything.
Looks as if fairly a bridge to go from this, to bringing fairness to the complete world, however that’s what Elon does, he comes up with loopy, unimaginable, fantastical outcomes, then asks for cash to assist attain them.
The query is, are these objectives practical? And if they’re, how distant are they from turning into a actuality?
As a result of in 10 years, these nonetheless appear largely unimaginable, however in 20 years, perhaps?
Can Elon promote individuals on the AI future for twenty years earlier than producing actual outcomes? At what level to individuals begin to query whether or not his claims are definitely worth the cash?
I don’t know, however I’m guessing that xAI will one way or the other discover its subsequent $15 billion, which is able to prop up Musk’s increasing X Corp empire.
