Elon Musk’s artificial intelligence company xAI is raising $15 billion from investors, sources familiar with the matter told CNBC’s David Faber.
Musk later called the news “False” in a post on his social media platform X.
The funding adds another $5 billion to the $10 billion round CNBC reported on in September, which valued the startup at $200 billion.
Sources told CNBC that a lot of the money in this $15 billion round will fund graphic processing units that underpin large language models
Artificial intelligence startups have reached sky high valuations in recent months as they raise massive amounts of capital to power seemingly endless demand for foundational models.
In September, AI startup Anthropic closed a $13 billion funding round that roughly tripled its valuation from March.
Sam Altman’s OpenAI in October closed a $6.6 billion share sale at a $500 billion valuation. Last month, Reuters reported that the ChatGPT maker was prepping for an IPO that could value it at $1 trillion.
Musk’s AI venture has repeatedly stirred controversy, including with its rapid build-out of large, power-hungry data centers in Memphis.
The data centers have used natural gas-burning turbines as a power source, emissions from which contribute to air quality problems in the area, according to local researchers.
XAI also makes a chatbot called Grok, and recently launched a site called Grokipedia, which is meant to be an online encyclopedia to rival Wikipedia.
Both Grok and Grokipedia have drawn widespread criticism for generating and spreading false content, and in some cases, anti-semitic and other hate speech.
XAI acquired social network X this March in an all-stock transaction in a deal that valued the platform at $33 billion.
Musk’s automaker Tesla also does business with xAI.
Newer Tesla vehicles feature Grok in their infotainment systems. Meanwhile, xAI has purchased tens of millions of dollars worth of Tesla’s battery energy storage systems for use at their data centers in Memphis.
Tesla held their annual shareholder meeting and proxy vote last week. Investors voted to approve a CEO pay plan for Musk that could net him around $1 trillion in Tesla shares over the next decade depending on what milestones the company achieves.
Also up for a proxy vote was a shareholder proposal to allow Tesla to invest in xAI. There were not enough votes in favor of an xAI investment for the Tesla board to move ahead with any deal.
At the annual meeting, Brandon Ehrhart, who is general counsel and corporate secretary at Tesla, said the company is “considering next steps on the issue.”