Elon Musk's startup is reportedly building up a war chest to take on OpenAI

• xAI is reportedly in talks to raise as much as $6 billion in funding.

• Last week, Elon Musk denied a report that xAI had raised $500 million toward a $1 billion goal.

• Musk has positioned his AI startup as an alternative to OpenAI.

Elon Musk's artificial intelligence startup xAI is reportedly looking to lock down billions more in funding as it continues to take aim at OpenAI.

The company wants to raise as much as $6 billion at a proposed valuation of $20 billion, the Financial Times reported on Friday. The publication said that xAI is still in the process of discussing the funding.

Musk's company is in funding talks with investors in Hong Kong, according to the FT report, which cited multiple sources with knowledge of the issue. One individual told the publication that xAI had also spoken with investors in the Middle East. One source told FT that Morgan Stanley is leading the fundraising.

Musk did not immediately respond to Business Insider's request for comment ahead of publication. Morgan Stanley declined to comment.

The FT report comes just a week after Bloomberg reported that xAI had secured $500 million in funding toward a goal of $1 billion. Bloomberg said the company was in talks for a valuation between $15 billion to $20 billion, but Musk denied the report on social media, calling it "fake news" without further specification.

Musk has positioned xAI as an OpenAI challenger from the get-go. The billionaire initially helped found OpenAI alongside Sam Altman, but left the company's board in 2018 and has since taken several digs at the ChatGPT creator.

Musk launched xAI in 2023 and the company released its Grok chatbot the same year.

While the billionaire is aiming to compete with OpenAI, his company will have some catching up to do. In December, Bloomberg reported that OpenAI was circling a potential $100 billion-plus valuation, which would make it one of the most valuable US startups, not too far behind SpaceX.

News of xAI's reported efforts to raise a war chest could also be a sign that Musk is doubling down on building AI products outside of Tesla. Musk appeared to give Tesla's board an ultimatum last week, saying he wants 25% voting control at Tesla or he'll stop growing AI development at the electric-car maker.

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