Musk’s xAI seeks up to 200 billion-dollar valuation in next funding round, FT reports

(Reuters): Elon Musk’s xAI is preparing to raise more money from investors in a deal that could value the artificial-intelligence company between $170 billion and $200 billion, the Financial Times reported on Friday, citing people close to the discussions.

Saudi Arabia’s PIF sovereign wealth fund is expected to play a large role in the deal, according to the FT report. PIF holds an indirect interest in xAI through its stake in Kingdom Holdings Company, which has an $800 million investment in the firm.

The talks were preliminary and the details could change, the report said.

“XAI is not seeking funding right now. We have plenty of capital,” Musk posted on X after the FT report.

PIF did not immediately respond to a Reuters request for comment.

Morgan Stanley announced in late June that xAI had completed a $5 billion debt raise, alongside a separate $5 billion strategic equity investment, as the startup seeks to expand its AI infrastructure through data centers amid intense competition.

The AI startup acquired X, Musk’s social media business formerly known as Twitter, in March, valuing xAI at $80 billion and X at $33 billion.

Musk launched xAI in July 2023 as an alternative to OpenAI’s ChatGPT, which said in March that it would raise up to $40 billion at a $300 billion valuation.

XAI expects to generate more than $13 billion in annual earnings by 2029, according to numbers revealed by its banker, Morgan Stanley, Bloomberg News reported in June.

The company expects $1 billion in gross revenue by the end of this year and plans to spend $18 billion on investments in data centers going forward.