I’m not precisely certain what the true wager is right here, but it surely’s Elon Musk, and I believe a number of enterprise capital companies are simply too scared to overlook out, in case he is ready to again up his many guarantees.

Or they simply imagine in his imaginative and prescient.

Both means, 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 further 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 traders is that xAI can acquire floor because of its connection to the opposite firms he leads, which may present expertise, knowledge and early income as clients of the start-up.”

So it’s thought-about a constructive that Musk’s different firms could make offers with xAI, as it might theoretically give it extra worth. Which appears sort of reductive, however apparently, there’s important optimism that Musk and Co. will have the ability to construct AI programs which might be in a position to compete with the rising large gamers within the house.

Which, actually, is more and more changing into an area wherein solely the largest of gamers are going to have any probability.

Amid an increasing vary of AI laws 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 an increasing number of. And that’s earlier than you additionally issue within the worth of the GPUs and different {hardware} issues which might be wanted to energy such processes within the first place.

Certainly, Meta CEO Mark Zuckerberg not too long ago famous that his firm will spend a further $5 billion on AI growth in 2024, on high of the $35 billion that it already has earmarked for its AI and VR developments. A part of that can see Meta buying greater than 350,000 further Nvidia H100 GPUs, which have turn into such a sizzling commodity, that even fulfilling the orders from Silicon Valley has turn into a problem.

Meta reportedly now has round 500,000 GPUs in operation, and is aiming to up that to one million within the close to future.

Google’s additionally secured new partnerships with Nvidia on its newest GPU fashions, whereas OpenAI, with accomplice 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, trying to develop its personal programs to interchange its Nvidia programs).

By comparability, xAI is aiming far decrease.

xAI is believed to at the moment be working round 30,000 H100 GPUs, although Musk and Co. are additionally trying to make the most of the assets of Tesla, which has anyplace as much as a further 300,000 or so GPUs in operation.

Which is clearly important, but it surely’s nonetheless a good distance off the assets of the large three, and it’s arduous to see, with out important further 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 not less than a number of billion {dollars} per 12 months at this level.”

So xAI is absolutely up towards it, and if it might’t pull off one thing large, it runs the danger of shedding out to the bigger platforms both means, 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 enchantment than the competitors.

However I simply don’t see it. Grok, which X is now utilizing to generate information headlines, is frequently improper, frequently misinterprets topics, based mostly on X posts, and doesn’t actually present a lot enhancement on the platform.

And it’s solely obtainable to X Premium customers both means, who at the moment make up lower than 1% of X’s complete person base.

So why xAI could be valued at $18 billion, I’m undecided, however perhaps, with the mixed perception from Tesla’s programs, and the potential for Elon and Co. to give you one thing really distinctive, perhaps there’s one thing there?

Looks like a giant “perhaps”, however both means, Elon has as soon as once more been in a position to safe funding, which can ideally see Grok turn into a extra responsive, and hopefully correct, AI bot device.

Which may additionally assist X, if it does turn into a extra standard perform, and get extra folks 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 signifies that this funding goes in the direction of the X mission.

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.

Possibly, then, this extra funding will assist X keep in operation, as a result of at 50% decrease income consumption, it’s at the moment nonetheless on a path to chapter within the close to future.

But when Grok will get higher, and extra folks sign-up, perhaps, X’s destiny will even shift.

It’s a number of reliance on a questionable AI mission, based mostly purely on compute comparability. However that, apparently, is the considering at play.