Chip-making giant Nvidia is in talks with Elon Musk to invest in his fast-growing artificial intelligence startup xAI, a source close to the situation said.
XAI — which powers the Grok chatbot on Musk’s X social network — is in talks with several investors to raise several billion dollars at a roughly $40 billion valuation, the WSJ reported this week.
The Information reported that he was talking to strategic investors — meaning technology companies as opposed to investment firms — but did not provide any names.
Venture firms including Sequoia Capital, Andreessen Horowitz and Vy Capital have been involved in recent funding talks, the tech news site reported.
Nvidia — which under CEO Jensen Huang last week surpassed Apple to become the world’s most valuable company with a market capitalization of more than $3.5 trillion — declined to comment when contacted by The Post.
The company had strongly denied similar rumors in the spring.
Musk expects to hold a major new fundraising round in January that could value xAI at up to $75 billion, two sources said.
It’s not uncommon for chipmakers like Nvidia to co-invest with their customers in projects, according to industry insiders.
An Nvidia analyst, who asked not to be named, said xAI’s competitors would still buy Nvidia’s chips even if it invested in xAI.
“If not, this transaction would never go forward,” the analyst said.
In a December 2023 blog post, Nvidia said it had made investments in more than two dozen companies last year as the pace of innovation in AI and computing accelerates.
“Nvidia’s corporate investment arm focuses on strategic collaborations,” Nvidia said in the blog post. “These partnerships stimulate joint innovation, enhance the Nvidia platform and expand the ecosystem.”
Some insiders say an xAI-Nvidia partnership would be a natural fit, given Musk’s extensive collaboration with Nvidia across his business empire.
In an October. 17 podcast, Huang praised Musk for building the fastest supercomputer on the planet with his company’s help in 19 days.
In April, Nvidia shares rose after Musk said Tesla would need access to more high-end Nvidia chips to power the electric carmaker’s AI plans, Barron’s reported.
Musk also said in April that xAI would need 100,000 Nvidia H100 chips to train improved versions of its Grok 3 chatbot.
The current version, Grok 2, received around 20,000 chips.
Musk was even quoted in an Nvidia press release following the launch of its advanced Blackwell AI chips.
“There is currently nothing better than Nvidia hardware for AI,” Musk said in the announcement.
Musk’s XAI is a direct competitor to Google’s Gemini AI platform and OpenAI-backed ChatGPT.
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