I’m not precisely certain what the true wager is right here, nevertheless it’s Elon Musk, and I think numerous enterprise capital corporations are simply too scared to overlook out, in case he is ready to again up his many guarantees.

Or they only consider in his imaginative and prescient.

Both means, xAI, the staff constructing X’s Grok AI chatbot, and different components inside Musk’s household of companies, has apparently secured virtually $6 billion in further funding from quite a lot of sources, together with Lightspeed Enterprise Companions, Andreessen Horowitz, Sequoia Capital and Tribe Capital.

The brand new funding spherical sees xAI now valued at round $18 billion.

As reported by The Monetary Occasions:

“The funding deal comes as Musk seeks to safe the monetary firepower to catch-up with market leaders OpenAI, Anthropic and Google, all of which have launched extra highly effective generative AI fashions than xAI. His pitch to buyers is that xAI can achieve floor because of its connection to the opposite corporations he leads, which may present know-how, knowledge and early income as clients of the start-up.”

So it’s thought-about a optimistic that Musk’s different corporations could make offers with xAI, as it might theoretically give it extra worth. Which appears sort of reductive, however apparently, there’s vital optimism that Musk and Co. will be capable of construct AI programs which are in a position to compete with the rising massive gamers within the house.

Which, actually, is more and more changing into an area by which solely the most important of gamers are going to have any likelihood.

Amid an increasing vary of AI rules and security pledges, and a brand new world of information sourcing offers, the price of creating massive language fashions (LLMs), and their subsequent AI programs, is rising increasingly more. And that’s earlier than you additionally issue within the value of the GPUs and different {hardware} concerns which are wanted to energy such processes within the first place.

Certainly, Meta CEO Mark Zuckerberg lately famous that his firm will spend a further $5 billion on AI improvement in 2024, on prime of the $35 billion that it already has earmarked for its AI and VR developments. A part of that can see Meta buying greater than 350,000 further Nvidia H100 GPUs, which have turn into such a sizzling commodity, that even fulfilling the orders from Silicon Valley has turn into a problem.

Meta reportedly now has round 500,000 GPUs in operation, and is aiming to up that to 1,000,000 within the close to future.

Google’s additionally secured new partnerships with Nvidia on its newest GPU fashions, whereas OpenAI, with associate Microsoft, says that it’s aiming to get round 10 million GPUs into manufacturing to energy its next-level AI fashions (although it’s additionally, reportedly, trying to develop its personal programs to substitute its Nvidia programs).

By comparability, xAI is aiming far decrease.

xAI is believed to presently be working round 30,000 H100 GPUs, although Musk and Co. are additionally trying to make the most of the assets of Tesla, which has anyplace as much as a further 300,000 or so GPUs in operation.

Which is clearly vital, nevertheless it’s nonetheless a great distance off the assets of the large three, and it’s laborious to see, with out vital further spend, how xAI even begins to compete on this respect.

Musk himself has acknowledged this, noting that:

“The stakes for being aggressive in AI are at the least a number of billion {dollars} per yr at this level.”

So xAI is de facto up in opposition to it, and if it might probably’t pull off one thing massive, it runs the danger of dropping out to the bigger platforms both means, that are already changing into synonymous with AI merchandise.

Elon’s massive hope is that X’s Grok AI chatbot will catch on, with its “maximally truth-seeking AI” ideally holding extra enchantment than the competitors.

However I simply don’t see it. Grok, which X is now utilizing to generate information headlines, is commonly incorrect, commonly misinterprets topics, primarily based on X posts, and doesn’t actually present a lot enhancement on the platform.

And it’s solely out there to X Premium customers both means, who presently make up lower than 1% of X’s complete consumer base.

So why xAI can be valued at $18 billion, I’m undecided, however perhaps, with the mixed perception from Tesla’s programs, and the potential for Elon and Co. to give you one thing really distinctive, perhaps there’s one thing there?

Looks like a giant “perhaps”, however both means, Elon has as soon as once more been in a position to safe funding, which is able to ideally see Grok turn into a extra responsive, and hopefully correct, AI bot device.

Which may additionally assist X, if it does turn into a extra widespread perform, and get extra folks utilizing the app, and signing as much as X Premium to make use of it. So the fates of xAI and X are intertwined, which ostensibly signifies that this funding goes in the direction of the X challenge.

Which actually wants it. X’s advert income is reportedly nonetheless down by round 50% on pre-Elon ranges, and X Premium take-up, as famous, stays low.

Perhaps, then, this extra funding will assist X keep in operation, as a result of at 50% decrease income consumption, it’s presently nonetheless on a path to chapter within the close to future.

But when Grok will get higher, and extra folks sign-up, perhaps, X’s destiny can even shift.

It’s numerous reliance on a questionable AI challenge, primarily based purely on compute comparability. However that, apparently, is the considering at play.