Elon Musk’s xAI Corp. is reportedly raising a multibillion-dollar funding round that will significantly increase its valuation. 

According to CNBC, the investment is worth up to $6 billion and should close early next week. The bulk of the capital, $5 billion, will reportedly be provided by sovereign funds in the Middle East while the rest is set to come from other investors. The deal is expected value xAI at $50 billion.

The Financial Times, in turn, reported that the artificial intelligence developer has already raised $5 billion through the fundraising effort. The paper cited its sources as saying that xAI is now worth $45 billion. That’s lower than the valuation cited by CNBC, but still $21 billion higher than what the company was worth after its previous funding round in May.

Musk launched xAI last year to compete with OpenAI in the large language model model. The company debuted its first LLM, Grok, last November. It has since released the LLM under an open-source license and introduced several newer, proprietary models with more advanced capabilities.

To support its AI development efforts, xAI has built a supercomputer in Memphis that features 100,000 of Nvidia Corp.’s H100 graphics cards. The system, which is known as Colossus, came online in September. CNBC reported that xAI will likely use its latest funding round to deploy 100,000 more GPUs in its Memphis data center. 

The supercomputer upgrade is not unexpected. Last month, Musk announced plans to expand Colossus with 100,000 more chips “soon.” Half of the new chips are expected to be H200s, which are more advanced than the H100 GPUs that currently power Colossus.

The H200 features 80% more memory than its predecessor along with 40% higher memory bandwidth. The latter improvement means that data can more quickly move between the GPU’s logic circuits and onboard RAM. Because AI models move data to and from memory more frequently than other workloads, the increased bandwidth can significantly boost LLM performance.

It’s possible that xAI will also use its new funding to buy other equipment from Nvidia. Alongside H100 graphics cards, Colossus includes the chipmaker’s SN5600 Ethernet switches. The supercomputer also uses an Nvidia processor known as the BlueField-3 to perform certain infrastructure management tasks. 

According to CNBC’s sources, the upgraded supercomputer will help power Tesla Inc.’s Full Self Driving software. It’s a suite of partly autonomous driving features that the automaker ships with some of its vehicles. A car equipped with Full Self Driving can automatically switch lanes, park, stop at red lights and perform related tasks.

The upgraded supercomputer will presumably also support xAI’s own AI development efforts.

The company’s latest LLM, grok-beta, debuted earlier this month. It can process prompts with up to 128,000 tokens and interact with other applications. The additional computing capacity that the planned Colossus expansion will provide should enable xAI to build LLMs with more advanced capabilities.

The hardware upgrade comes as OpenAI is reportedly also working to expand its AI development infrastructure. According to The Information, the ChatGPT developer and Microsoft Corp. are currently in the third stage of a five-phase supercomputer construction project. The initiative is expected to see the companies build a system with millions of AI processors by 2028.

Image: Nvidia