xAI, a generative artificial intelligence startup led by Tesla (TSLA) CEO Elon Musk, is seeking to raise $10 billion in new funding, which would value the company at $75 billion, according to Bloomberg. This funding round would be a significant increase from the company’s previous valuation of $50 billion, which was based on a $6 billion funding round from late last year. The new funding is expected to support xAI’s ongoing development of its AI technology, such as its Grok chatbot, which has already gained significant attention.
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The new funding round is expected to involve previous investors like Sequoia Capital, Andreessen Horowitz, and Valor Equity Partners. xAI has been actively developing its technology and has made significant investments in its infrastructure, such as a massive data center in Memphis, which will utilize 100,000 of Nvidia’s H100 GPUs. The company also released its first API and has launched its official Grok app for iOS. Additionally, xAI has announced plans to generate $100 million in annual revenue, although most of this revenue is expected to come from Musk’s other companies, including the social network X.
The funding round comes as competition heats up against other major players like Microsoft-backed OpenAI (MSFT). In fact, a Musk-led group recently made an unsolicited offer to buy the non-profit entity that controls OpenAI for $97.4 billion, with xAI reportedly involved in the offer. Some have speculated that the offer may be a strategic move by Musk to slow down OpenAI’s capital-raising efforts. Musk is also currently suing OpenAI in an attempt to stop its for-profit conversion.
Is Tesla Stock a Buy, Hold, or Sell?
Although retail investors cannot invest in xAI or most of Musk’s ventures, they can invest in his most popular company, Tesla. When turning to Wall Street, analysts have a Hold consensus rating on TSLA stock based on 13 Buys, 12 Holds, and 10 Sells assigned in the past three months, as indicated by the graphic below. After a 77% rally in its share price over the past year, the average Tesla price target of $340.50 per share implies 4.3% downside risk.
