What just happened? xAI is shaping up to be a serious rival to market leader OpenAI after Elon Musk's startup said it would raise $6 billion in its Series B funding round. xAI was only announced less than one year ago and released its chatbot, Grok, last November.

xAI wrote that investors in its Series B fundraising include Andreessen Horowitz, Sequoia Capital, and Saudi Prince Alwaleed bin Talal. The company says the money will be used to take its first products to market, build advanced infrastructure, and accelerate research and development of future technologies.

Six billion dollars is no small amount of money, but it's par for the course in the lucrative AI industry. Anthropic has raised over $6 billion, while Microsoft invested a massive $13 billion into OpenAI.

When Musk announced xAI last year, the sixth company under his control, he said it had the goal of understanding the "true nature of the universe."

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xAI launched its first and so far only product, Grok, in November. Musk said the chatbot is modeled on the excellent UK book/radio/TV series (and the less successful Hollywood adaptation) The Hitchhiker's Guide to the Galaxy, which means it likes humor, sarcasm, and sassiness, apparently.

After introducing the latest 1.5 version of Grok earlier this year, it was recently reported that a supercomputer powered by 100,000 Nvidia H100 GPUs – around five times the number used in the current model – is being built to power the next version of Grok, at a cost of billions of dollars. Musk, who is calling the machine the "gigafactory of compute," added that it will be "at least four times the size of the biggest GPU clusters that exist today."

The Series B funding announcement states that xAI is primarily focused on the development of advanced AI systems that are truthful, competent, and maximally beneficial for all of humanity. Before Grok, Musk talked about creating a "maximum truth-seeking AI" that he called "TruthGPT."

Musk has long been critical of OpenAI, calling it "effectively controlled by Microsoft." He was one of the co-founders, backers, and initial board members of the ChatGPT maker, departing the company in 2018 over what he said was a conflict of interest with Tesla. The billionaire sued OpenAI and CEO Sam Altman earlier this year over claims they breached their original contractual agreements by putting profit ahead of developing AI that benefits humanity. OpenAI responded by publishing some of Musk's old emails.

Musk repeated xAI's request for more people to join the company, adding that its mission requires "maximally rigorous pursuit of the truth, without regard to popularity or political correctness."