News of xAI’s $6bn funding round and plans for Nvidia-powered supercomputer extend rally of Nvidia stock as AI frenzy continues

Nvidia’s share price soared as much as 8 percent to close up about 7 percent on Tuesday, extending a three-day post-earnings rally that has taken its market value closer to that of Apple.

The trigger for Tuesday’s surge appeared to be the news that Elon Musk’s artificial intelligence start-up xAI had raised $6 billion (£4.7bn), for a post-money value of $24bn, an indicator that the boom in AI investment is not yet over and is continuing to produce new customers for Nvidia’s already scarce AI accelerator chips.

xAI said it would use the funding to roll out new products and build infrastructure, with The Information reporting the company was planning to build a gigantic Nvidia-powered supercomputer to drive future versions of the company’s Grok chatbot.

AI demand

The system would use at least four times the number of clustered Nvidia H100 chips used in the biggest such systems today, Musk reportedly told xAI investors.

Earlier this year Musk said the Grok 2 large language model (LLM) required 20,000 H100 chips to train, and that Grok 3 would require 100,000 of the in-demand H100 chips.

Nvidia last week forecast second-quarter revenues above analysts’ expectations and announced a stock split.

Shares in the company, which is one of the main beneficiaries of the rush to build AI services, have more than doubled so far this year after tripling last year.

As of Tuesday’s close it was valued at $2.8tn, close to Apple’s $2.9tn. Apple is Wall Street’s second-biggest company after Microsoft at $3.1tn.

User interest lags

While companies’ investments in AI show no sign of slowing down, a report this week from Reuters Institute and Oxford University found that user interest in generative AI tools was far lower, with 20 to 30 percent of the online population of surveyed countries saying they had not heard of any of the most popular generative AI tools.

ChatGPT was the most popular of such offerings, but even in that case it is not used routinely, with many of those who said they had used it having done so only once or twice to see what it was like, the study found.