Musk's AI Startup xAI, Valuation Up to $275 Trillion... 10x in One Year

[Financial News]  


Tesla CEO and the world's richest person Elon Musk's AI startup xAI is aiming for a valuation of up to $200 billion (approximately 275 trillion won) and is seeking to secure capital.

After Musk, who was involved in the launch of OpenAI, left OpenAI, he founded a corporation in March 2023, which became the basis for the launch of xAI in July of the same year. In just two years since its establishment, xAI has emerged as a $200 billion startup. The valuation has surged 10 times in one year.

Financial Times (FT) reported on the 12th (local time), citing sources, that xAI plans to assume a maximum valuation of $200 billion and seek additional capital.

The new capital raising, which is expected to start as early as next month, will be the third capital raising in less than two months. Last month, xAI secured $300 million through a so-called secondary offering, selling unlisted shares held by employees, and this month, it secured $10 billion through loans and cash investments.

As AI leader NVIDIA broke the all-time high stock price record for four consecutive days until the 11th, becoming the first listed company to surpass a market capitalization of $4 trillion, the AI theme is heating up again, and Musk's xAI is actively securing funds.

In the 'Series B' capital raising last May, xAI's valuation was assessed at $18 billion, but this time it has surged to more than 10 times that level.

In March last year, xAI expanded its size by acquiring Musk's social media X (formerly Twitter) for $45 billion. The merged company's value was then assessed at approximately $113 billion.

xAI is also standing out in the AI development competition.

Last week, it unveiled the fourth model of the Grok chatbot. However, Grok is also a controversial AI.

During last year's presidential election, amid controversy over Musk's far-right tendencies, Grok praised Adolf Hitler, who started World War II, and shared anti-Semitic posts on its X account.

According to sources, despite these controversies, xAI aims to be valued at $170 billion to $200 billion in this new capital raising.

In the capital raising, the Public Investment Fund (PIF) of Saudi Arabia's sovereign wealth fund is expected to play a leading role. PIF indirectly owns shares in xAI through its holdings in Kingdom Holding Company, which invested $800 million in xAI.

Meanwhile, in addition to xAI, Musk's space development company SpaceX has also recently seen its valuation rise.

According to FT, SpaceX is currently pursuing the sale of approximately $1 billion worth of its own shares. The company's valuation is assessed at $400 billion.

However, the future outlook is uncertain.

This is because Musk, who supported Trump's re-election and showed a 'bromance' with Trump as the head of the Department of Government Efficiency (DOGE) after the launch of the second administration, has turned into a 'rival' with Trump since stepping down as DOGE head at the end of May.

In particular, SpaceX's heavy reliance on government projects means that the strained relationship between Trump and Musk could be a significant obstacle to business.

dympna@fnnews.com Song Kyung-jae Reporter