I’m not precisely positive what the true wager is right here, nevertheless it’s Elon Musk, and I believe a number of enterprise capital companies 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 method, xAI, the staff constructing X’s Grok AI chatbot, and different parts inside Musk’s household of companies, has apparently secured virtually $6 billion in extra 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 acquire floor because of its connection to the opposite firms he leads, which may present know-how, knowledge and early income as prospects of the start-up.”

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

Which, actually, is more and more changing into an area wherein solely the largest of gamers are going to have any likelihood.

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

Certainly, Meta CEO Mark Zuckerberg not too long ago famous that his firm will spend a further $5 billion on AI growth 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 extra Nvidia H100 GPUs, which have turn into such a scorching 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 one million within the close to future.

Google’s additionally secured new partnerships with Nvidia on its newest GPU fashions, whereas OpenAI, with companion 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, seeking 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 seeking to make the most of the sources of Tesla, which has wherever as much as a further 300,000 or so GPUs in operation.

Which is clearly vital, nevertheless it’s nonetheless a good distance off the sources of the massive three, and it’s exhausting to see, with out vital extra 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 very least a number of billion {dollars} per 12 months at this level.”

So xAI is actually up in opposition to it, and if it could possibly’t pull off one thing huge, it runs the danger of shedding out to the bigger platforms both method, that are already changing into synonymous with AI merchandise.

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

However I simply don’t see it. Grok, which X is now utilizing to generate information headlines, is recurrently flawed, recurrently misinterprets topics, based mostly 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 method, who presently make up lower than 1% of X’s complete consumer base.

So why xAI could 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 provide you with one thing actually distinctive, perhaps there’s one thing there?

Looks like a giant “perhaps”, however both method, Elon has as soon as once more been in a position to safe funding, which can 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 individuals 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 mission.

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.

Possibly, 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 individuals sign-up, perhaps, X’s destiny may even shift.

It’s a number of reliance on a questionable AI mission, based mostly purely on compute comparability. However that, apparently, is the considering at play.