Why is xAI valued at $18B?

Elon Musk’s xAI Corp. is reportedly closing a funding round, valuing it at $18 billion.

Elon Musk’s artificial intelligence startup xAI is reportedly near to closing a funding round that would value the company at $18 billion. https://t.co/BExf6ehwDn

— Forbes (@Forbes) May 9, 2024

But as xAI is still under the radar of most users, people are questioning this staggering valuation.

xAI Unique Advantages

To reach the next frontier, AI platforms will have to improve in different areas. xAI is IMHO in a unique situation to meet these three main challenges.

Access real-time data

xAI can leverage the X platform to be aware of the latest news and trends.

Have real-world understanding

xAI can leverage the unique and massive flow of video data used to train Tesla FSD to improve its AI model’s spatial awareness and physics understanding.

Apprehend how the human brain works

xAI can leverage a brand-new flow of data for training, Neuralink implants.

xAI Challenges

Based on these major unfair advantages, we can safely assume that xAI can successfully build the next-gen AI platforms and tools. Still, it must win the hearts and minds of a large audience and mitigate some major risks and challenges.

Safety Risk

The inclination of X to promote freedom of speech may limit its capability to grow with certain audiences, like what happened with X advertisers.

Lack of Availability

As of today, accessing Grok still requires an X Premium account and is limited to the US and Europe.

Lack of Developers Community

Despite being open source and easily accessible, xAI developer platform is limited to an early access program, is not available through hyper-scaler like AWS, GCP, and Azure, and lacks integrations with LangChain and other AI frameworks.

Conclusion

Aside from the the obvious influence of Elon Musk’s brand on this investment decision, there are a lot of perfectly rational reasons to believe in a bright future for xAI.

Do you see any missing major elements in this analysis?