Elon Musk has promised that his artificial intelligence business, xAI, will help revolutionize society. Before that happens, however, the company must become financially viable, a goal it has yet to achieve. Indeed, at the moment, the company seems to be spending money at a rate that would be completely unacceptable in any other industry.
A new report by Bloomberg claims that the AI company plans to spend at least $13 billion this year, which is a little over a billion dollars a month. The publication cites “people familiar with the terms of the deal who asked not to be identified because the information is private.” At the same time, the company continues to raise huge amounts of money from investors to maintain its dizzying cash flows.
It was recently reported that xAI has received generous investments from some of the leading Silicon Valley venture capital firms (including Google-backed Sequoia). However, Bloomberg notes that despite “prolific fundraising efforts,” the company is “barely keeping up with expenses” due to huge cash outlays. Gizmodo has reached out to xAI for more information.
What is the company doing with all this money? So far, xAI’s main contribution to society has been Grok, Musk’s chatbot that sometimes wakes up surprisingly well. In the past, Grok has raised eyebrows with its unexpected “white genocide” speeches. Earlier this year, the company merged with X (the company formerly known as Twitter, which Musk bought in 2022). A new Bloomberg report notes that xAI hopes to use X’s current data streams (from billions of posts created by users and bots) to help continuously train the Grok algorithm.
xAI may be owned by the richest man in the world, but the company is actually considered an outsider when it comes to the current race for artificial intelligence supremacy. Musk’s company is in a fierce battle with a number of other better-positioned and better-resourced firms (such as OpenAI, Meta, and Anthropic), each of which is eager to proclaim itself the king of the AI boom.
As usual, Musk has made many promises about what he believes his companies can do in the areas of automation, robotics, and generative AI. He has claimed that his company will eventually create a line of household robots that will do Americans’ homework, and he recently promised to launch a robotics business. Hyperbole aside, it remains unclear whether Musk’s company will be able to survive these early stages of its business life cycle, which are associated with a lack of cash.
