Elon Musk's artificial intelligence venture xAI is pushing for one of the biggest funding rounds in tech history. The company is in advanced talks to raise $15 billion in fresh equity at a valuation of $230 billion, according to a Wall Street Journal report published late Tuesday.

The Valuation Jump

Musk's wealth manager, Jared Birchall, presented the fundraising terms to potential investors Tuesday evening, according to people familiar with the discussions. If successful, this would represent a remarkable leap from the $113 billion valuation xAI disclosed after acquiring Musk's social media platform X back in March.

One small wrinkle: it's unclear whether the $230 billion figure Birchall shared represents a premoney or postmoney valuation. That distinction matters quite a bit when you're talking about this kind of money.

xAI, which Musk launched in July 2023 as a direct challenger to OpenAI, didn't immediately respond to requests for comment. The timing is interesting considering Musk dismissed a similar fundraising report from CNBC last week as "False" in a post on X.

What xAI Is Building

The company's flagship product, Grok, competes head-to-head with OpenAI's ChatGPT, Google's Gemini, and other prominent AI chatbots. Musk has even floated the idea of using Tesla to financially support xAI's ambitions.

Like other AI players, xAI is pouring money into infrastructure. The company is investing heavily in property in Memphis, Tennessee, for its planned Colossus supercomputer. These massive capital requirements explain why AI startups keep coming back to the fundraising well.

The timing isn't ideal from a stability standpoint. xAI recently experienced a wave of executive departures, losing several senior leaders including X CEO Linda Yaccarino and the finance chiefs at both X and xAI.

The Broader AI Funding Frenzy

xAI isn't alone in commanding eye-popping valuations. Many AI startups have reached stratospheric numbers in recent months as they race to raise billions for building the infrastructure needed to train and refine AI models.

Case in point: data analytics company Databricks is reportedly in talks to raise capital at a valuation exceeding $130 billion, roughly 30% higher than its last financing round just two months ago.

Investor appetite for AI companies remains strong despite mounting worries about an AI bubble. The combination of soaring valuations and aggressive spending plans has some market watchers nervous, but the money keeps flowing anyway.