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Nvidia shares jump as Elon Musk’s AI startup secures $6 billion in funding

Published 28/05/2024, 15:28
© Reuters
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Shares in Nvidia (NASDAQ:NVDA) jumped at the Tuesday market open, boosted in part by the announcement that Elon Musk’s artificial intelligence startup, xAI, has raised $6 billion in a bid to challenge OpenAI.

The Series B funding round, revealed in a blog post on May 26, comes less than a year after xAI’s debut and marks a significant investment in the burgeoning field of AI development.

Elon Musk, who had been an early supporter of artificial intelligence and backed OpenAI before it introduced ChatGPT in late 2022, later withdrew his support from the venture, advocating caution due to the potential dangers of the technology. Last year, he joined other industry leaders in calling for a pause in AI development.

In November, Musk launched Grok, a rival to OpenAI’s ChatGPT, which was trained on and integrated into X.com, the social network formerly known as Twitter. Grok is currently the most visible product of xAI’s work, which is led by executives with previous experience at Alphabet’s (NASDAQ:GOOGL) DeepMind, Microsoft (NASDAQ:MSFT), and Tesla (NASDAQ:TSLA).

The newly raised funds will be used to bring xAI’s first products to market, build advanced infrastructure, and accelerate the development of future technologies, according to the blog post.

Last week, The Information reported that xAI is planning to build a massive supercomputer to power the next version of Grok. Per the report, Musk informed investors that he aims to have the supercomputer operational by fall 2025.

The project may involve a partnership with Oracle (NYSE:ORCL) to develop the massive computer. Once completed, the connected clusters of Nvidia’s flagship H100 graphics processing units (GPUs) would be at least four times the size of the largest GPU clusters currently in existence, the report states, citing Musk’s presentation to investors in May.

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