Hey everybody, welcome back to the Elon Musk Podcast. This is a show where we discuss. The Critical. Crossroads the shape SpaceX Tesla X. The Boring Company. And Neurolink, I'm your host, Will Walden. XAI just locked in $10 billion in new funding. At a $200 billion valuation, it's double where it stood four months ago. The speed of that jump raises one pretty big question. What exactly are investors paying for right now?
Elon Musk has now secured the second largest private valuation and AI behind Open AI. This new route, which includes participation from Valor Equity Partners, VI Capital, Anderson Horowitz, Sequoia Capital, and Fidelity, puts XAI ahead of Anthropic and Inflection by a huge margin. The funding is expected to close in the coming weeks, though XAI hasn't commented about this. The group of investors looks nearly identical to the ones that backed Musk's earlier.
Ventures especially. SpaceX and Tesla. That familiarity likely helped compress timelines and inflate the valuation. Now investors are betting on two things. Musk's influence and XA is tight. Integration with XXAI runs Grok. That's the chatbot on X. And Grok is already absorbing real time content from X. Of course that creates a self reinforced data loop. Grok learns from X, responds to X users, and shapes the activity on the platform.
And no other AI startup has that level of user engagement built into consumer facing products. That loop there now the $200 billion price tag reflects that built in user base more than any specific product milestone. Unlike Open AI or Anthropic, XAI hasn't released benchmark comparisons for Grok show it beating competitors across widely accepted test sets. Instead, it is focused on open sourcing earlier versions and shipping frequent updates more recently, Croc 2.5.
Now, that model arrived in June and matched GPD 4 on multiple tasks, though it still trails in more complex reasoning and code generation than the others. Now, open source also plays a central role in how Musk is positioning XAI. The company has released the weights and architecture for several versions of Grok, including the tokenizer and training setup. How that move attracts researchers and developers who want to build on top of XAI's
work. And it gives XAI access to community driven improvements without hiring everyone directly. And Musk has framed openness as a necessity to avoid centralized control of AI. It also sets XAI apart from open AI to stop releasing weights for its best models after just GPT. 2X AI's financial strategy mirrors what Musk is done with Tesla and SpaceX. Raise a butt load of money, aggressively attach long term growth stories and ignite short term profitability.
Now, this round is reportedly structured as a tender offer, meaning investors are buying existing shares rather than injecting injecting fresh capital. Now that implies early Sai shareholders, including Musk himself, are cashing out some of their stakes at the new valuation while still holding on to long term upside.
The company now plans to build its own supercomputer to support future versions of Crock. Earlier this year, Musk announced that XAI would build a system with 100,000 NVIDIA each 100 GPU's. It's nearly five times larger than what Meta is currently running, and it would rank among the largest AI compute clusters in the world. And Musk wants it operational by the end of this year. And it's there, pretty much if that timeline holds up, though, if they get this done and it's perfect.
Would give XAI unprecedented hardware independence, especially when combined with X's data firehose. Now, unlike Open, AIXAI is tightly bound to a single ecosystem. Everything is built and is routed through X. That gives it a data advantage, but also increases its platform risk. If X continues to bleed users or struggle with ad revenue, that drag could bleed into XA is momentum.
And at the same time, if Croc continues improving and X regains relevance as an AI native platform, this flywheel spins faster. XAI becomes the first company for social media, and frontier models evolve inside the same product. This funding around makes clear that the bet isn't just on AI performance, though, It's on Musk's ability to turn a medium platform into a huge data engine. The strategy still has major gaps, so Grok doesn't yet outperform Claude or GPD 4 in
most head to head evaluations. It lacks enterprise tools, developer API's, or productivity integrations that competitors have used to lock in users for a long time. But none of that seems to matter to the investors buying in now. Musk has already merged XAI and X Corp into a single company as well. That move lets him shift resources, staff, and product updates between teams without
regulatory friction. It also blurs the line between social media and also the model lab that's going on at XAI. Now Grok gets a built in user base, X gets an AI layer, and the two grow together. All together now, this run gives XAI more capital than any AI startup has ever raised in a single. Go also sets expectations that Grok will close the gap when rivals quickly try to take them out. Investors aren't waiting for it
to catch up, though. They're betting that the combination of Musk X and open source Momentum will let it bypass traditional AI race dynamics entirely. Hey, thank you so much for listening today. I really do appreciate your support. If you could take a second and hit the subscribe or the follow button on whatever podcast platform that you're listening on right now, I greatly appreciate it. It helps out the show tremendously and you'll never
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