Home Editor's Pick Cathie Wood’s Ark Invest Acquires Stake in Elon Musk’s xAI Startup

Cathie Wood’s Ark Invest Acquires Stake in Elon Musk’s xAI Startup

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Cathie Wood’s Ark Investment Management has made a significant move in the artificial intelligence (AI) space by acquiring a stake in Elon Musk’s AI startup, xAI. The investment, which represents approximately 2% of the fund’s holdings, was revealed in an email to clients on Tuesday, according to Bloomberg News.

TLDR

Cathie Wood’s Ark Investment Management has acquired a stake in Elon Musk’s artificial intelligence startup, xAI, representing about 2% of the fund’s holdings.
The purchase is part of Ark’s growing investment in the AI industry, with the fund also holding positions in OpenAI (roughly 4% of holdings) and Anthropic (about 5% of assets).
xAI recently raised $6 billion in a Series B funding round, backed by investors including Andreessen Horowitz and Sequoia Capital, increasing its valuation to approximately $24 billion.
Ark Chief Futurist Brett Winton believes that xAI’s access to X’s distribution and real-time data, combined with Elon Musk’s focus on velocity, differentiates it from other AI ventures.
Cathie Wood, known for her bullish investments in Tesla during the pandemic, believes that AI foundation models will be worth multiple trillions of dollars by the end of the decade.

The purchase of the xAI stake is part of Ark’s growing investment in the AI industry. The firm’s Ark Venture Fund, launched in September 2022, also holds positions in OpenAI, the creator of ChatGPT, accounting for roughly 4% of its holdings, and Anthropic, the company behind the Claude AI model, making up about 5% of its assets.

Ark Chief Futurist Brett Winton expressed his confidence in xAI’s potential, stating,

“xAI’s access to X’s distribution and real-time data differentiates it from any other AI play, particularly when combined with Elon Musk’s maniacal focus on velocity.” Winton believes that AI foundation models will be worth “multiple trillions of dollars by the end of this decade.”

The investment comes on the heels of xAI’s announcement that it raised $6 billion in a Series B funding round, backed by prominent investors such as Andreessen Horowitz, Sequoia Capital, Fidelity Management & Research Company, and Prince Alwaleed bin Talal and Kingdom Holding, among others.

This funding round increased xAI’s valuation to approximately $24 billion, a remarkable achievement for a startup that has only been in existence for just over a year.

Cathie Wood, the founder and CEO of Ark Investment Management, is known for her bullish investments in Musk-related companies.

During the COVID-19 pandemic in 2021, Wood made headlines for her investments in Tesla, which contributed to her rise to fame.

However, her most well-known investment vehicle, the $6.2 billion Ark Innovation ETF, has recently faced challenges due to declines in the share prices of some of its key holdings, including Tesla.

As xAI continues to develop and expand, Musk has hinted at plans to launch a new data center by fall 2025, dubbed the “Gigafactory of Compute.” This facility is intended to train and develop the next generation of the company’s Grok AI system.

Musk has been vocal about his views on AI and its potential impact on the future. During a speech at the VivaTech Paris 2024 conference, he expressed concern that current AI models are not “maximally truth-seeking” and instead “pander to political correctness.”

He has also suggested that AI will eventually “do everything better than you,” potentially making employment obsolete.

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