Musk’s AI Ambitions Get $10 Billion Boost
Elon Musk’s artificial intelligence company, xAI, has secured $10 billion in new funding to accelerate its technological race against competitors like OpenAI and Anthropic. According to a CNBC report citing Morgan Stanley, the capital injection will be used to expand xAI’s Memphis-based Colossus supercomputer and enhance the development of its Grok chatbot. The funding round was oversubscribed and included a mix of secured debt and strategic equity investments.
This latest raise puts xAI in a stronger position as it seeks to challenge OpenAI, which earlier closed a $40 billion funding round at a $300 billion valuation. Anthropic, another key rival, has also received new backing, pushing its valuation past $60 billion.
Source: NIK
In a strategic move earlier this year, Musk sold his social media platform X to xAI, integrating Grok directly into the platform. That deal valued xAI at $80 billion and X at $33 billion, factoring in $12 billion of debt from X’s previous $45 billion valuation. Musk originally acquired X (formerly Twitter) for $44 billion in April 2022.
Trump vs Musk: The Feud Intensifies
The funding announcement comes amid renewed hostilities between Musk and former US President Donald Trump. On Tuesday, Trump criticised Musk via Truth Social, accusing him of benefiting from federal subsidies and calling for an investigation into Musk’s companies by the proposed Department of Government Efficiency (DOGE).
“No more Rocket launches, Satellites, or Electric Car Production, and our Country would save a FORTUNE. Perhaps we should have DOGE take a good, hard look at this? BIG MONEY TO BE SAVED!!!” Trump posted.
Musk quickly responded on his own platform, X, distancing himself from government aid and replying, “I am literally saying CUT IT ALL. Now.” The public spat has previously impacted the markets; a similar clash in June resulted in Tesla losing $150 billion in market value.
Grok Powers xAI’s Expansion
Grok, xAI’s proprietary chatbot, is a cornerstone of Musk’s vision for the future of AI. Now fully integrated into X, Grok represents a bold attempt to challenge the dominance of ChatGPT and other AI tools in both consumer and enterprise markets.
With the added funding, xAI plans to scale its operations aggressively and deepen its capabilities, particularly in training large language models and running them on proprietary infrastructure. The Colossus supercomputer in Memphis will play a key role in these efforts.
Political Tensions Impacting Tech
Musk’s increasing political involvement has added a layer of complexity to xAI’s public perception. He has recently stepped up his criticism of government spending, urging voters to hold lawmakers accountable and even calling for the formation of a new political party to combat what he describes as excessive federal expenditures.
These interventions have not only reignited his rivalry with Trump but also raised questions about the influence of billionaires in shaping public discourse and policy. Market analysts have noted that Musk’s political statements often have tangible effects on investor sentiment and stock prices.
Crypto Gets a Voice in Washington
In a related development, Senator Cynthia Lummis has proposed an amendment to Trump’s tax and spending bill that would ease the tax burden on cryptocurrency users. The amendment seeks to exclude digital asset transactions under $300 from taxation, with an annual cap of $5,000. It also proposes to defer taxes on crypto obtained through mining, staking, or airdrops until the assets are sold.
Source: Elon Musk
Additionally, the amendment includes a 30-day wash sale rule for crypto, which would restrict investors from exploiting tax-loss strategies.
This comes after the Senate recently rejected a Democrat-backed proposal to ban government officials and their families from owning or promoting cryptocurrencies, memecoins, or NFTs for a year after leaving office.
Conclusion
Elon Musk’s xAI is emerging as a formidable force in the global AI arms race, bolstered by significant investor backing. However, as the company expands, its founder’s political clashes and vocal criticism of federal policies continue to draw scrutiny. Meanwhile, in Washington, the battle over how to regulate and tax emerging technologies like AI and cryptocurrency is heating up, signalling that the worlds of tech and politics remain deeply intertwined.
