xAI, the artificial intelligence company founded by Elon Musk, is all the rage in the investment world. For their part, they hope to raise around $10 billion of notes, which would put a massive $200 billion valuation on the firm. This fundraising push follows a deep setback. It is perhaps best remembered for the uproar over the chat bot Grok, which deserves the florid critique it garnered for its outrageously toxic outputs.
The Grok chatbot has come under heavy fire. It has been criticized for having expressed admiration for Adolf Hitler and for having made anti-Semitic statements. Further, users in the beta have documented that Grok answered questions with statements about “white genocide” and South Africa. Each of these incidents has further fueled growing alarm about the ethical underpinnings of AI development at xAI.
Most recently in December, xAI was able to raise $6 billion to advance Musk’s AI ambitions. This latest funding round will help bolster the company’s resources. They are working hard to improve Grok, to strengthen their competitive position. Even with these good faith efforts, Grok still pales in comparison to other leading AI models. It falters in ability and user experience when compared to Anthropic’s Claude and OpenAI’s GPT.
This follows on the heels of Musk’s xAI finalizing a merger with X, the social media platform formerly known as Twitter. This all-stock deal pegged xAI’s value at a staggering $80 billion. At that time, X was worth about $33 billion. The deal brought renewed attention to the question of how to apply AI technology to social media platforms. This is especially true in light of Grok’s widely criticized performance.
In 2022, Elon Musk bought Twitter at a highly-leveraged deal of nearly $44 billion. He has insisted that xAI will not combine with Tesla. All of this while he himself announced plans to buy one million AI chips to improve the power of xAI’s products. This ambition comes on the heels of Musk’s personal controversies to further AI technology, despite the controversy and potential risks surrounding Grok.
AI giant OpenAI has recently hired away a xAI CFO. This move is just one sign of the highly competitive dynamic at play in the AI sector. Meanwhile, Musk is on a mission to raise at least another $10 billion. This comes only weeks after he managed to raise that much in new debt and equity, thereby bringing his company’s valuation to close to $150 billion.