According to the New York Post, chip giant Nvidia (NVDA) is looking to make a strategic investment in Elon Musk’s AI venture, xAI. With Nvidia’s backing, xAI could bolster its capabilities and expedite the development of its AI projects.
xAI, founded by Tesla’s (TSLA) CEO Elon Musk in March 2023, focuses on developing advanced AI models. The startup is reportedly exploring a new funding round in January 2025, which could value the company at $75 billion, a stark increase from $24 billion in early 2024.
Interestingly, Musk has a long-standing relationship with Nvidia. He has utilized Nvidia’s technology for various projects, including Tesla’s self-driving car technology and xAI’s AI models. Thus, the deal could open up new opportunities for growth and innovation for xAI.
NVDA’s AI Investment Spree Continues
Nvidia’s interest in xAI aligns with its broader strategy of investing in AI companies. According to Crunchbase, the company has taken part in 21 funding rounds for AI startups so far in 2024. A potential investment in xAI could further enhance Nvidia’s position in the AI market and strengthen its leadership.
It’s important to note that tech giants such as Alphabet (GOOGL), Salesforce (CRM), and Meta Platforms (META) are actively investing in AI startups. Consequently, a potential partnership between Nvidia and xAI could further heat competition within the AI sector.
Is Nvidia a Good Stock to Buy Now?
Turning to Wall Street, NVDA has a Strong Buy consensus rating based on 39 Buys and three Holds assigned in the last three months. At $153.86, the average Nvidia price target implies a 13.63% upside potential. Shares of the company have gained about 47% in the past six months.
