The $10B Raise Was Loud… But It’s What Elon’s Doing With Grok’s Brain That Should Worry OpenAI

By Stocks News   |   6 days ago   |   Stock Market News
The $10B Raise Was Loud… But It’s What Elon’s Doing With Grok’s Brain That Should Worry OpenAI

If you spent more than five minutes online yesterday, you’ve probably seen the latest beef between Elon Musk and Donald Trump. Trump’s been threatening to unleash something called the Department of Government Efficiency (yes, DOGE, and yes, that’s real) on Musk’s companies, while Musk has threatened to launch a new political party (the “America Party”) and primary every lawmaker who backed Trump’s $3.3 trillion spending bill. Oh, and he also called the GOP the “Porky Pig Party,” so that puts him ahead on the scoreboard (or at least on mine).

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But while all that chaos soaked up headlines, Musk was quietly making a far more consequential move behind the scenes… raising a YUGE pile of cash for his AI startup, xAI.

And no, this wasn’t one of those early-stage “pass the hat around Silicon Valley” raises funded by tech bros. Musk has done that before…. remember the early SpaceX and Tesla days, when half the cap table looked like a Reddit mod meetup? This time was different. According to Morgan Stanley, $5 billion came from debt financing (secured notes and term loans), while another $5 billion came from strategic equity investors… many of them major institutions. On top of that, the round was oversubscribed, meaning investors were practically elbowing each other to give Musk money… despite xAI’s flagship chatbot, Grok, recently going rogue and ranting about “white genocide” due to a backend bug. (Small issue. Totally normal. Definitely what you want from your government-grade AI.)

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The bulk of it is being funneled into Colossus, Musk’s Memphis-based supercomputer project that (fun fact) is also facing lawsuits for allegedly polluting local groundwater. Colossus already runs on 200,000 GPUs, and Musk’s goal is to scale that to 1 million GPUs… an absolutely massive number that would give xAI one of the largest AI compute infrastructures in the world. For context, GPT-4 (the model behind ChatGPT) was likely trained using somewhere between 25,000–30,000 GPUs. So yeah, Musk’s playing to win. Or at least to out-GPU everyone by a mile.

With that kind of hardware behind it, Musk is going way past tweaking Grok… he wants to rebuild it entirely. His plan is to start over and retrain the model on what he calls a “cleaned-up” version of human knowledge. He argues that most AIs are trained on biased, low-quality junk… Reddit threads, Wikipedia articles, and internet detritus. (Hard to argue when you’ve seen what ChatGPT says after 2 a.m.)

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His solution is to rewrite the data. Delete what he sees as misinformation. Add in what’s “missing.” Then use that to retrain Grok from the ground up. The goal is a so-called “truth-seeking” model… although critics say it sounds a lot more like Elon’s version of the truth. This $10B raise is a major milestone. xAI was valued at $80 billion before the deal. Depending on how the equity was priced, its valuation could now be well over $100–120 billion, closing the gap with OpenAI ($300B) and Anthropic ($60B+). In other words, I can’t make jokes about xAI being Elon’s vanity project anymore… it’s one of the three most valuable AI startups in the U.S.

And unlike his rivals, Musk has something they don’t: a social media platform to test on in real time. Earlier this year, he merged xAI with X (formerly Twitter), meaning Grok is now baked into a platform he owns and controls completely. That gives him endless training data, feedback loops, and distribution… all without asking for permission. (It’s like if Mark Zuckerberg trained Llama on your WhatsApp chats and then posted the results to Instagram. Oh wait…)

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Grok 4 is expected soon, and Musk isn’t stopping at search bars or chat windows. He wants Grok used in schools, government agencies, and federal data systems. Reports have already surfaced that officials inside the Department of Homeland Security are using Grok… despite the fact that it hasn’t been approved for government use. (So totally fine. Very secure. Nothing to see here.)

This goes beyond chatbot bragging rights. Musk is building an AI machine from top to bottom…  controlling the chips, the model, and the platform it lives on. It’s the Tesla strategy, repackaged for artificial intelligence. You know the gameplan: own the infrastructure, own the messaging, and shape the rules of the game while you’re at it.

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And the implications go far beyond one chatbot. With control over the chips (via massive GPU investment), the model (Grok), and the platform (X), Musk is quietly building a vertically integrated AI monster. It’s the Tesla playbook… own the supply chain, own the narrative, and own the future.

After being pushed out of OpenAI and watching it turn into Microsoft’s favorite child (think: Ivanka), this is his comeback and if we know anything about Elon, he won’t rest until he’s caught up with his boy Sammy (and passed him).

At the time of publishing this article, Stocks.News holds positions in Tesla and Microsoft as mentioned in the article.

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