Semiconductor giant Nvidia is in talks to invest in Elon Musk’s fast-growing artificial intelligence startup xAI, people familiar with the matter said.
XAI, which powers the insidious Grok chatbot on Musk’s social network X, is in talks with some investors to raise billions of dollars at a valuation of about $40 billion, WSJ says. reported this week.
The Information reported that he was in talks with strategic investors (meaning technology companies, not investment companies), but did not name them.
The latest funding talks include venture firms such as Sequoia Capital, Andreessen Horowitz and Vi Capital, the technology news site reported.
Nvidia, which under CEO Jensen Huang last week overtook Apple to become the world’s most valuable company with a market capitalization of more than $3.5 trillion, declined to comment when contacted by the Post. .
The company strongly denied similar rumors in the spring.
Musk plans to hold a large new funding round in January that could value xAI as much as $75 billion, two people familiar with the matter said.
Industry insiders say it’s not uncommon for chipmakers like Nvidia to co-invest in projects with customers.
One NVIDIA analyst, who requested anonymity, said that even if xAI were to invest, xAI’s competitors would still buy NVIDIA’s chips.
“Otherwise, this deal will never move forward,” the analyst said.
Nvidia said in a December 2023 blog post that it invested in more than 20 companies last year as the pace of innovation in AI and high-speed computing accelerates.
“Nvidia’s corporate investment arm is focused on strategic alliances,” Nvidia said in a blog post. “These partnerships will stimulate collaborative innovation, strengthen the Nvidia platform, and expand our ecosystem.”
Some insiders say a partnership between xAI and Nvidia would be a natural fit, given Musk’s extensive collaboration with Nvidia across his business empire.
In an Oct. 17 podcast, Huang praised Musk for building the fastest supercomputer on the planet in 19 days with the help of his company.
Barron’s reported that Nvidia’s stock price rose after Musk said in April that Tesla needed to make more use of Nvidia’s high-end chips to advance the electric car maker’s AI plans. .
Musk also said in April that xAI would need 100,000 Nvidia H100 chips to train an upgraded version of the company’s Grok 3 chatbot.
The current version, Grok 2, required approximately 20,000 chips.
Musk was also quoted in Nvidia’s press release following the release of its advanced Blackwell AI chip.
“There is nothing better than Nvidia hardware for AI right now,” Musk said in the release.
Musk’s xAI is a direct competitor to Google’s Gemini AI platform and OpenAI-backed ChatGPT.
