A massive $6 billion financing, is Musk's supercomputer idea just a gimmick?

Compiled by: MetaverseHub

On May 27, Elon Musk's large model startup xAI officially announced it has secured $6 billion in Series B funding, with a valuation of approximately $24 billion, making it a unicorn.

01. Musk's Supercomputer Ambition

Previously, The Information reported that Musk's artificial intelligence startup xAI plans to build a large supercomputer to enhance the capabilities of its AI chatbot Grok.

This supercomputer, referred to by Musk as the "supercomputer factory," is expected to be ready by the fall of 2025 and may be developed in collaboration with Oracle. Musk aims to significantly surpass competitors' GPU clusters in scale and capability through this development.

In a presentation to investors, Musk revealed that the new supercomputer will utilize up to 100,000 NVIDIA H100 GPUs based on the Hopper architecture, making its scale at least four times that of the largest existing GPU clusters.

NVIDIA's H100 GPUs are highly sought after in the AI data center chip market, and due to strong demand last year, they were once difficult to supply. However, these GPUs are no longer NVIDIA's top product, as the company is about to launch the H200 computing GPU for AI and HPC applications and is preparing to release the Blackwell-based B100 and B200 GPUs later this year.

It remains unclear why xAI decided to use essentially last-generation technology in its 2025 supercomputer, but this massive hardware investment certainly reflects xAI's ambitions.

xAI is also attempting to compete directly with AI giants like OpenAI and Google.

Musk, who is also a co-founder of OpenAI, positions xAI as a formidable challenger in the AI field, which is precisely why he wants to build a supercomputer.

According to Musk, the Grok 2 model requires about 20,000 NVIDIA H100 GPUs for training, while future iterations (like Grok 3) will require up to 100,000 GPUs.

Both xAI and Oracle declined to comment on the collaboration during interviews, leading to speculation about some details of the partnership and the supercomputer project.

However, Musk's presentation to investors emphasized his commitment to advancing AI technology through significant infrastructure investments and strategic partnerships.

02. $6 Billion Funding

The supercomputer project coincides with xAI's recent announcement of $6 billion in Series B funding.

xAI stated in a press release: "xAI is pleased to announce that our Series B funding has reached $6 billion, with major investors including Valor Equity Partners, Vy Capital, Andreessen Horowitz, Sequoia Capital, Fidelity Management & Research Company, Prince Alwaleed Bin Talal, and Kingdom Holding."

The statement added that the funds from this round will be used to bring xAI's first products to market, build advanced infrastructure, and accelerate the development of future technologies.

xAI also stated that it "will continue to move along this steep trajectory in the coming months," with exciting technology updates and products expected to be announced soon.

This funding is expected to drive xAI's product development, infrastructure construction, and future AI research.

xAI launched Grok in November 2023, aiming "not just to be a traditional chatbot." However, as Grok has evolved, with iterations like Grok 1.5 featuring long-context understanding and Grok 1.5V with visual information processing capabilities, its computational demands have surged.

Reports indicate that training the Grok 2 model requires 20,000 NVIDIA H100 GPUs, while Grok 3 and beyond will need 100,000 NVIDIA H100 GPUs.

The extraordinary growth in computational demand necessitates a supercomputer. Currently, the frontrunners in the supercomputer race are Frontier (USA), Aurora (USA), Eagle (USA), and Fugaku (Japan).

While the specific specifications of xAI's planned supercomputer are still unknown, if xAI's aforementioned requirements are met, it will belong to the supercomputer category and could potentially challenge the dominance of existing machines.

03. The Battle Between xAI and OpenAI

xAI stated that, as outlined in a recent blog post, it has experienced rapid growth over the past year.

"From announcing the establishment of the company in July 2023, to launching Grok-1 on X in November, to the recent announcement of the improved Grok-1.5 model with long-context capabilities, and the Grok-1.5V with image understanding capabilities, xAI's model capabilities have rapidly improved."

The Grok chatbot was released to X Premium Plus users in December. Unlike traditional chatbots, Grok draws inspiration from conservative commentators like Tucker Carlson and Joe Rogan, exhibiting a politically incorrect and humorous personality during programming.

xAI added: "With the open-source release of Grok-1, xAI has opened the door to advancements in various applications, optimizations, and model expansions."

Musk, who was closely associated with OpenAI as a co-founder, left OpenAI a few years ago to pursue his own path in AI development, leading to intense disputes between the two parties.

Musk has filed a lawsuit against his former company and its current CEO Altman, accusing them of deviating from the company's original purpose of benefiting humanity rather than pursuing profit.

As a result, xAI emphasizes: "xAI is primarily committed to developing advanced AI systems that are real, competent, and bring the greatest benefit to all humanity. The mission is to understand the true nature of the universe."

In contrast, OpenAI's CEO Altman is seeking trillions of dollars in funding to transform the global chip industry. As one of OpenAI's founding members, Musk is suing the company, claiming it has abandoned its mission to benefit humanity.

In summary, this $6 billion funding will help xAI accelerate the development and iteration of its chatbot Grok, allowing it to compete with the large models of AI leaders like OpenAI's GPT, Meta's Llama, Anthropic's Claude, and Google's Gemini, making xAI's future development highly anticipated.