The battle to dominate the AI landscape heats up once again with xAI the new competitor in the field inches closer to catch up to OpenAI and the man behind is none other than Elon Musk himself. It was back in 2015, the formation of OpenAI kick started the AI gold rush and Elon Musk was one of the co-founders of now widely used ChatGTP. The venture was primarily to stave off the dominance of Google in the AI field by bringing in fresh competition. But Musk later stepped down from the board of directors back in 2018 due to conflict of interest. Now in the upcoming year Musk plans to get back into the AI world with firm determination and that’s when Colossus comes into play.
The Giant Colossus Supercomputer
Back in mid 2023 Musk established xAI. Almost a year later in September of 2024 he would go on to launch the Colossus in Memphis, Tennessee. While the whole infrastructure was completed within a short period of just 122 days, it took merely 19 days to deploy the vast amount of GPUs that make up the Colossus. The giant supercomputer burns through almost 150 megawatts of power and nearly a million gallons of water per day for its cooling systems.
xAI is training its AI model Grok which is a chatbot and rival to the most used ChatGPT. For this the facility uses state of the art Nvidia GPUs and in huge quantities. Initially 15,000 Nvidia Hopper H100 GPUs were used to train the Grok-2. The beta version of Grok-2 was made available to users back in August. Since then Elon has poured a huge amount of investment into speeding up the scaling process of Colossus to make Grok more competitive.
Since the inception of Colossus the amount of GPUs has been scaled up to 100,000 from just 15,000. Now with more than 100,000 Nvidia Hopper H100s hard at work it’s become the largest AI facility. With this immense powerhouse Musk plans to release Grok-3 by the end of the year. So the release of Grok-3 is not far away. Musk predicts by the time Grok-3 is released it will be the most powerful AI in the world at that point.
Planned Expansion
Elon Musk plans to upgrade the Colossus to a million GPUs. But in the near future he wants to double the power of the supercomputer with 100,000 more next generation Nvidia Blackwell H200 GPUs. These next gen GPUs will have double the efficiency and will make the AI training a lot faster.
Musk already has business deals ranging between $3 to $4 billion with Nvidia to provide GPUs both for Tesla and xAI. So, Tesla and xAI are top clients of Nvidia, and the amount of investment will increase in the near future. How Nvidia can supply that many is a question, with Musk indicating he will be pouring in the new money raised into scaling up his AI training model by buying an additional 50,000 H200 GPUs over the coming few months.
Investment and Return
As of now the xAI company has a value of $45 billion. Musk has been able to raise $11 billion for xAI this year alone. During May he raised $6 billion from venture capitalists and various funds. Andreessen Horowitz, Sequoia Capital, Fidelity and Saudi’s Kingdom Holding were some of the notable investors. Besides that the $5 billion would come from Tesla as an investment into xAI. These funds will flow into the development of Tesla AI interference along with the xAI. Musk is pouring in investment to speed up the process of creating the best AI on the market by scaling up the facility. xAI will help in creating the ultimate Optimus AI for household usage in the future. So Musk predicts this will generate a revenue of $1 trillion per year in the future for Tesla.
Elon Musk is playing a high stake high return game when it comes to AI. There is much at play. Nvidia has to keep up with demand and supply in time. xAI and Tesla have to implement in time to create the ultimate AI. Now it remains to see if Musk’s bet will pay off.