Expectations surrounding generative AI systems appear to be waning. In recent days, the discourse has turned pessimistic, with critics suggesting that AI systems won’t improve significantly under the current scaling strategies. Curiously, the money keeps flowing. The latest example of these colossal investment rounds is particularly striking.
Fever for xAI. According to The Wall Street Journal, the AI company founded by Tesla CEO Elon Musk raised $5 billion in a recent investment round. The Journal reported that the lead investors include the Qatar Investment Authority, Valor Equity Partners, Sequoia Capital, and Andreessen Horowitz.
A $50 billion startup. Earlier this year, after raising $6 billion, xAI was valued at $24 billion. The new round doubles its valuation to $50 billion.
Election boost. President-elect Donald Trump’s victory may have been a factor in the investment round. Musk’s support for Trump’s candidacy has had a particularly positive effect on his companies. Tesla’s revenue continues to rise, and xAI now has more resources to develop its AI models.
Money for GPUs. Founded in April 2023, xAI plans to use part of the investment to purchase an additional 100,000 GPUs from Nvidia to support training and development of new AI models. Few companies can compete with the scale of this infrastructure.
A small chatbot. The singular focus of investors is surprising, given that xAI’s most visible product is Grok, a chatbot initially known for its sarcastic tone—a feature that wasn’t particularly practical. The latest version, Grok 2, has sparked controversy for its ability to generate violent and compromising deepfakes that mimic celebrities.
Symbolic revenue. Initially available only to X’s paid subscribers, xAI recently expanded Grok’s access to enterprise users. The startup claims to have reached $100 million in annual revenue, a symbolic figure given the billion-dollar costs of developing generative AI models.
What’s the plan? According to the Journal, xAI plans to launch a new version of Grok in December. Musk has claimed it will be “the world’s most powerful AI by any metric.” However, his track record with ambitious promises, such as Tesla’s autonomous driving system, invites skepticism. Given Grok’s current limitations in scope, reputation, and availability, it’s difficult to take this claim at face value. Moreover, benchmarks for evaluating generative AI systems remain inconclusive. But with Musk, you never know.
Image | TED Conference
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