TMTPOST -- Elon Musk’s artificial intelligence (AI) startup xAI may soon double its valuation in less than half of a year.

Credit：Xinhua News Agency

XAI, which Musk launched in July 2023 as a competitor to OpenAI, will be valued at $50 billion following a new funding of up to $6 billion, which should close early this week, sources told David Faber, a financial journalist and co-anchor of CNBC’s morning show “Squawk on the Street”. Out of the latest funding, $5 billion would reportedly come from sovereign funds in the Middle East, and the reminder from investors including those may want to re-up their investments.

The new money is expected to be used for purchase of 100,000 Nvidia chips, according to the report. XAI aims to build the world’s largest supercomputer in Memphis, Tennessee, which is set to help train Tesla Inc.’s AI technologies, including its driver assistance feature Full Self Driving. The startup was greenlighted last month by the local government to lease 522 acres to expand its footprint in the city on the Mississippi River.

Musk had approached investors in Qatar and Saudi Arabia about a fundraising for xAI that could roughly double its valuation to $45 billion, The Financial Times reported two weeks ago. The report cited people with the knowledge of the matter that Musk also talked to existing investors including Sequoia Capital and Valor Euqity Partners, adding that the talks is still at an early stage.

 If the new funding concludes, it would make xAI’s value more than double from that in late May. XAI announced on May 26 its Series B funding round of $6 billion backed by key investors like Valor Equity Partners, Vy Capital, Andreessen Horowitz, Sequoia Capital, Fidelity Management & Research Company, Prince Alwaleed Bin Talal and Kingdom Holding. The startup’s value was raised to $24 billion after that funding round since its pre-mony valuation was $18 billion, according to a Musk’s post on X.

Another startup founded by Musk also saw valuation surge after former U.S. President Donald Trump won the 2024 presidential election earlier this month. SpaceX plans to launch a tender offer in December to sell existing shares at about $135 a piece, the Financial Times reported. With the reported offer, SpaceX would boast a valuation of more than $2500 billion. Bloomberg reported SpaceX could be valued about $255 billion for its shares sales to insiders. If these reports are accurate, valuation of Musk’s rocket and satellite company could be boosted by more than 20% in six months as it was valued at about $210 billion in a tender offer late June.

Trump’s win is considered as a boon for  Musk’s companies. Tesla shares have soared 34.7% as of Monday close after the election. The electric vehicle giant last week first crossed $1 trillion in market value since the mid 2021, driven by the frenzy bet that Musk and his companies including Tesla will benefit from Trump’s return to the White House.

Musk has committed more than $75 million to his American PAC last month to help Trump and other Republicans win the election this year. His total known political spend this year is at over $132 million, Yahoo Finance reported late October. That’s one of the largest sums dedicated to a political candidate and a party. Musk also offered to give away $1 million a day to voters in swing states for signing his PAC’s petition backing the Constitution.

Trump said last Tuesday Musk and former Republican presidential candidate Vivek Ramaswamy were appointed to lead the Department of Government Efficiency, or DOGE, to "slash excess regulations, cut wasteful expenditures, and restructure Federal Agencies." Musk and Ramaswamy's work "will conclude no later than July 4, 2026," or by the 250th anniversary of the Declaration of Independence, Trump said. Musk said late October he could cut at least $2 trillion from the annual budget of the federal government.