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Musk’s xAI Eyes $170-$200 Billion Valuation in Upcoming Funding Round, Financial Times Reports

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Elon Musk’s artificial intelligence company xAI is reportedly preparing to raise additional capital in a funding round that could value the firm between $170 billion and $200 billion, according to the Financial Times, citing sources close to the discussions. Saudi Arabia’s Public Investment Fund (PIF) is expected to play a significant role in the round, holding an indirect stake in xAI through its investment in Kingdom Holdings Company, which has put $800 million into the AI startup.

The discussions are still preliminary, and details may evolve, the report noted. Musk himself responded on X, stating that xAI is not currently seeking funding and has sufficient capital. PIF did not immediately comment on the report.

Previously, in June, Morgan Stanley disclosed that xAI completed a $5 billion debt raise along with a separate $5 billion strategic equity investment. The company is aggressively expanding its AI infrastructure with new data centers amid increasing competition in the sector.

xAI acquired X (formerly Twitter) in March, valuing the AI firm at $80 billion and X at $33 billion. Musk founded xAI in July 2023 to compete with OpenAI’s ChatGPT, which recently announced plans to raise up to $40 billion at a $300 billion valuation.

According to projections shared by Morgan Stanley, xAI expects to generate over $13 billion in annual earnings by 2029 and anticipates $1 billion in gross revenue by the end of this year. The company also plans to invest $18 billion in data center expansion going forward.

Huawei aims to expand role in Brazil’s data center market amid pending tax incentives

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Chinese technology giant Huawei has expressed interest in strengthening its position as a supplier of data center solutions in Brazil, Reuters reported on Thursday. While Huawei clarified it does not plan to invest directly in data centers, the company is keen to provide connectivity, storage, and energy solutions for the growing market.

Huawei’s Latin America and Caribbean Vice President of Public Relations, Atilio Rulli, emphasized the importance of the Brazilian government implementing upcoming tax-break incentives designed to attract tech investments. “We want the government to implement these incentives, which are good for the country, and the time has to be now,” he said.

Brazil, Latin America’s largest economy, is working to build a strong data center industry leveraging its abundant renewable energy resources. The government’s tax-break plan is expected to be sent to Congress soon, according to a finance ministry adviser.

The country has already attracted attention from major players such as ByteDance, TikTok’s parent company, as part of its digital infrastructure expansion.

Huawei reaffirmed its commitment to supporting Brazil’s digital transformation with reliable, scalable, and sustainable data center solutions once government incentives come into force.

America’s Largest Power Grid Struggles to Meet Surging AI and Data Center Demand

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America’s largest power grid, managed by PJM Interconnection and covering 13 states from Illinois to Tennessee, is facing significant strain as data centers and AI chatbots rapidly increase electricity consumption—outpacing the grid’s ability to build new power plants. This has led to sharp electricity price increases, with bills projected to rise over 20% this summer in some areas.

The rising costs stem from an 800% jump in prices at PJM’s annual capacity auction last year, which sets rates to ensure electricity availability during extreme weather. These price hikes trickle down to consumers and have sparked political and organizational upheaval: Pennsylvania’s governor has threatened to pull the state from PJM, the grid’s CEO announced he will step down, and key board members have been replaced.

The auction is scheduled again soon, with expectations of further price rises, driven by a growing mismatch between supply and demand. Aging power plants are retiring faster than new ones come online, and PJM has delayed auctions and paused accepting applications for new power plants—actions that experts say exacerbate the shortage.

Pennsylvania Governor Josh Shapiro emphasized the need for transparency, speed, and cost control from PJM. The grid operator attributes the supply crunch partly to external factors, such as state policies that closed fossil fuel plants prematurely and soaring demand from data centers, especially in “Data Center Alley” in Northern Virginia.

Although PJM has cleared about 46 gigawatts of new power projects in recent years—enough for 40 million homes—many face delays due to local opposition, supply chain issues, and financing problems. PJM lost more than 5.6 gigawatts of power capacity in the last decade and added only about 5 gigawatts in 2024, less than smaller grids in California and Texas.

Demand from data centers alone is expected to increase by 32 gigawatts by 2030, with AI-related workloads significantly contributing to the surge.

The power crunch intensified after PJM paused processing new power plant applications in 2022, overwhelmed by renewable project requests, and after AI chatbots like ChatGPT gained popularity in 2023, boosting data center energy use. Consumer groups have called for a redo of the 2024 capacity auction, citing unfairly high prices.

In response, PJM implemented reforms including price caps and biannual auctions, and expedited the connection of 51 power projects, but many will not be operational until 2030 or later. For example, the Three Mile Island nuclear plant restart, contracted by Microsoft, won’t come online before 2027.

Experts warn that PJM must improve its processing of new power plant applications to effectively address the supply-demand imbalance and prevent blackouts.