I’m not precisely certain what the true guess is right here, however it’s Elon Musk, and I think quite a lot of enterprise capital corporations are simply too scared to overlook out, in case he is ready to again up his many guarantees.
Or they only imagine in his imaginative and prescient.
Both method, xAI, the workforce constructing X’s Grok AI chatbot, and different parts inside Musk’s household of companies, has apparently secured nearly $6 billion in extra funding from quite a lot of sources, together with Lightspeed Enterprise Companions, Andreessen Horowitz, Sequoia Capital and Tribe Capital.
The brand new funding spherical sees xAI now valued at round $18 billion.
As reported by The Monetary Instances:
“The funding deal comes as Musk seeks to safe the monetary firepower to catch-up with market leaders OpenAI, Anthropic and Google, all of which have launched extra highly effective generative AI fashions than xAI. His pitch to buyers is that xAI can acquire floor because of its connection to the opposite corporations he leads, which may present expertise, knowledge and early income as prospects of the start-up.”
So it’s thought-about a constructive that Musk’s different corporations could make offers with xAI, as it might theoretically give it extra worth. Which appears form of reductive, however apparently, there’s important optimism that Musk and Co. will be capable of construct AI programs which are capable of compete with the rising large gamers within the area.
Which, actually, is more and more changing into an area during which solely the largest of gamers are going to have any probability.
Amid an increasing vary of AI rules and security pledges, and a brand new world of information sourcing offers, the price of growing giant language fashions (LLMs), and their subsequent AI programs, is rising increasingly. And that’s earlier than you additionally issue within the value of the GPUs and different {hardware} issues which are wanted to energy such processes within the first place.
Certainly, Meta CEO Mark Zuckerberg just lately famous that his firm will spend a further $5 billion on AI growth in 2024, on prime of the $35 billion that it already has earmarked for its AI and VR developments. A part of that may see Meta buying greater than 350,000 extra Nvidia H100 GPUs, which have turn out to be such a scorching commodity, that even fulfilling the orders from Silicon Valley has turn out to be a problem.
Meta reportedly now has round 500,000 GPUs in operation, and is aiming to up that to 1,000,000 within the close to future.
Google’s additionally secured new partnerships with Nvidia on its newest GPU fashions, whereas OpenAI, with associate Microsoft, says that it’s aiming to get round 10 million GPUs into manufacturing to energy its next-level AI fashions (although it’s additionally, reportedly, seeking to develop its personal programs to switch its Nvidia programs).
By comparability, xAI is aiming far decrease.
xAI is believed to at present be working round 30,000 H100 GPUs, although Musk and Co. are additionally seeking to make the most of the sources of Tesla, which has anyplace as much as a further 300,000 or so GPUs in operation.
Which is clearly important, however it’s nonetheless a great distance off the sources of the large three, and it’s exhausting to see, with out important extra spend, how xAI even begins to compete on this respect.
Musk himself has acknowledged this, noting that:
“The stakes for being aggressive in AI are no less than a number of billion {dollars} per 12 months at this level.”
So xAI is admittedly up in opposition to it, and if it will probably’t pull off one thing large, it runs the danger of shedding out to the bigger platforms both method, that are already changing into synonymous with AI merchandise.
Elon’s large hope is that X’s Grok AI chatbot will catch on, with its “maximally truth-seeking AI” ideally holding extra attraction than the competitors.
However I simply don’t see it. Grok, which X is now utilizing to generate information headlines, is frequently fallacious, frequently misinterprets topics, primarily based on X posts, and doesn’t actually present a lot enhancement on the platform.
And it’s solely out there to X Premium customers both method, who at present make up lower than 1% of X’s complete person base.
So why xAI could be valued at $18 billion, I’m unsure, however perhaps, with the mixed perception from Tesla’s programs, and the potential for Elon and Co. to give you one thing actually distinctive, perhaps there’s one thing there?
Looks like an enormous “perhaps”, however both method, Elon has as soon as once more been capable of safe funding, which is able to ideally see Grok turn out to be a extra responsive, and hopefully correct, AI bot instrument.
Which may additionally assist X, if it does turn out to be a extra in style perform, and get extra individuals utilizing the app, and signing as much as X Premium to make use of it. So the fates of xAI and X are intertwined, which ostensibly implies that this funding goes in direction of the X challenge.
Which actually wants it. X’s advert income is reportedly nonetheless down by round 50% on pre-Elon ranges, and X Premium take-up, as famous, stays low.
Perhaps, then, this extra funding will assist X keep in operation, as a result of at 50% decrease income consumption, it’s at present nonetheless on a path to chapter within the close to future.
But when Grok will get higher, and extra individuals sign-up, perhaps, X’s destiny may also shift.
It’s quite a lot of reliance on a questionable AI challenge, primarily based purely on compute comparability. However that, apparently, is the pondering at play.
