Elon Musk's xAI in talks to raise funding valuing it at $40 billion

New fundraising effort would substantially increase startup's valuation from spring

- Berber Jin

Elon Musk's xAI is in talks with investors for a funding round that would value it at around $40 billion, according to people familiar with the matter, escalating the tech industry's race to build advanced generative AI technology.

The startup was last valued at $24 billion just a few months ago, when it raised $6 billion in the spring.

xAI hopes to raise several billion dollars in the new funding round, one of the knowledgeable people said. The cash raised would be added to the $40 billion valuation.

The funding discussions are in the early stages, meaning that terms could change or the talks could fall apart.

Representatives for xAI didn't respond to requests for comment.

Silicon Valley's biggest AI startups are raising cash at breakneck speed to fund the intensive computing power needed to develop and run their technology.

Earlier this month, OpenAI raised $6.6 billion at a $157 billion valuation in what was one of the largest private funding rounds in U.S. history.

Perplexity, an AI search startup, is in talks to raise new funding that would more than double its valuation to $8 billion, The Wall Street Journal recently reported.