xAI recently managed to raise $6 billion to develop and expand the Colossus supercomputing environment. This supercomputer should be up and running before the end of 2025.
In the new investment round, $6 billion was raised on a market value of up to $50 billion. As much as $5 billion of the capital raised was raised by Middle Eastern (sovereign wealth) investment funds. The remaining $1 billion was raised by other investors.
An earlier investment round in May this year had also raised $6 billion. Then, at a market value of $24 billion
Expansion of Colossus AI environment
With the investments, Elon Musk’s AI company aims to further develop and expand its supercomputing facility. Eventually, this location should house a supercomputing environment of at least 1 million GPUs. With its supercomputing environment, xAI is building an advanced AI system that it says is more powerful than current AI capabilities.
In September this year, the Colossus AI environment was realized for that purpose, running on as many as 100,000 Nvidia H100 GPUs. This super environment is to be expanded by another 100,000 GPUs, according to owner Musk.
Price of GPUs may be a bottleneck
The question is, however, whether xAI can really afford the needed Nvidia H100 GPUs with the raised capital. Although the AI specialist is likely to get a good discount, H100 GPUs now cost $25,000 each. This brings the price of the requested 100,000 GPUs to $20 billion, which is more than the recently raised investment amount of $6 billion.
Also read: Musk reportedly working on xAI supercomputer for late 2025