Good Morning,
Elon Musk’s AI startup xAI is courting investors for a fresh $10 billion funding round that could value the company at $75 billion, which will raise total amount raised to $22 Billion.
Last night on X, the 42 minute video is all about Grok 3’s release.
Grok 3 features will be rolled out for premium users of social media platform X, starting Tuesday stateside, while the model will also be accessible through a separate subscription for the Grok web and app version. Not all features are quite ready, so it’s a bit of an announcement + Beta in practice.
Pricing
The pricing starts at $16 per month for access to Grok 3, while a more advanced access option, known as Super Grok, costs $30 per month.
As far as I can tell xAI doesn’t even make $100 million in revenue yet.
Somehow xAI is in discussions to raise $10 billion, which would push its valuation to $75 billion. Existing investors, including Sequoia Capital, Andreessen Horowitz, and Valor Equity Partners, are considering participation.
What is xAI’s DeepSearch?
The team also said it was launching a new product called “Deep Search,” which would act as a “next generation search engine.”
All of this is interesting because xAI is a first mover in AI datacenter compute. That is, xAI has been using an enormous data center in Memphis containing around 200,000 GPUs to train Grok 3. They scaled it up very fast. So this is the first point where we can see if that compute according to scaling laws is able to develop a superior product?
A Curious Truth Seeking AI?
Musk’s lingo isn’t terribly accessible:
“Grok 3 is an order of magnitude more capable than Grok 2,” Musk said during a live-streamed presentation on Monday. “[It’s a] maximally truth-seeking AI, even if that truth is sometimes at odds with what is politically correct.”
Musk has been vocal about xAI’s ambitions, particularly its flagship product, the Grok chatbot, which is integrated into X. But to get access to Super Grok, there’s another website coming soon that will be the best way to access their best models.
Essentially, Grok 3 will be rolled out for premium X subscribers, starting Tuesday stateside, and will also be accessible through a separate subscription for the model’s web and app versions, the xAI team said.
What is the Future?
Musk and xAI said that Grok 3 contains advanced reasoning abilities and will continue being improved through reinforcement learning.
“We should emphasize that this is kind of a beta, meaning that you should expect some imperfections at first, but we will improve it rapidly, almost every day,” he said, adding that the voice assistance for the model would be released at a later time.
I think the X event was more like an announcement, even though they are clearly trying to release things fast. For example their Voice side of the chatbot wasn’t ready on time. As you know, Musk, along with Sam Altman, helped create OpenAI as a nonprofit in 2015. Musk left around 2018 and started xAI rather recently.
Grok 3 will be a demo about if scaling laws and if compute is the key. This isn’t going to be a ChatGPT or DeepSeek like moment. Elon Musk is popular in some circles, but very unpopular in others, including in Europe.
As is often the cases these days - Grok 3 is a family of models, to be precise. A smaller version of Grok 3, Grok 3 mini, responds to questions more quickly at the cost of some accuracy.
The pricing is confusing and trying to upsell X with it also annoying. For users interested in a more extensive subscription option, the X Premium subscription is priced at $16 per month or $168 annually, while the Premium+ subscription is now set at $50 per month or $350 annually following the recent price increase announced by Elon Musk.
"People are going to fall in love with Grok. It's 1000% likely." - Elon Musk
Benchmark Claims
xAI claims Grok 3 beats GPT-4o on benchmarks including AIME (which evaluates a model’s performance on a sampling of math questions) and GPQA (which assesses models using PhD-level physics, biology, and chemistry problems).
An early version of Grok 3 also scored competitively in Chatbot Arena, a crowdsourced test that pits different AI models against each other and has users vote on their preferred responses, according to xAI.
Elon Musk is raising a lot of Billions for a product that might hinge on his political reputation, DOGE wheeling and dealing, and tarnished brand.
The release of Grok 3 is a big deal because it serves as a crucial test of the first scaling law—the idea that increasing pre-training compute leads to better performance.
The Future of Problem Solving with AI
Many to some advanced functionalities of Grok 3 will actually require the Super Grok subscription. It wasn’t made super clear which.
"We're seeing the beginnings of creativity," Musk said.
How super is super, Grok? 🦸🏻♂️
Will XAI be a Search Engine?
Grok 3 also introduces DeepSearch, which the company described as both a new kind of search engine and an early version of agent-like capabilities.
What will be the limits of Grok 3 DeepSearch engine? Apparently you’ll be able to of course integrate with with X Advanced Search.
For $30 per month or $300 per year, SuperGrok also unlocks additional considerations and queries in the new DeepSearch search engine, and adds unlimited image generation.
xAI claims that Grok 3 Reasoning outperforms the best version of o3-mini — o3-mini high — on several popular tests, including the new AIME 2025 math test.
xAI’s marketing and branding could be better, but that’s another story.
How many subscriptions does BigTech and Generative AI startups think consumer can or will be able to afford exactly?
Always racing in speed, Musk joked: "This is kind of a beta where you should expect some imperfections at first," Musk said. "If you want a more polished version, perhaps wait a week."
No Voice is more than an imperfection man.
The term Grok comes from Robert Heinlein’s novel Stranger in a Strange Land. Which is itself sort of alienating. But that is the point isn’t it? Musk it himself an alienated individual with a chip on his shoulder. (Sam Altman would say “insecure”).
The idea of creating the smartest AI came to Musk in April of last year. In his opinion, the only way to succeed and create the best AI is to create your own data center. Elon Musk is probably the best person in the world for funding AI, xAI is proving in 2025.
Crucially a planned voice mode was pulled from Monday's launch of February 17th, 2025 that I have referenced here many times.
Users can ask Grok 3 to “Think,” or — for more difficult queries — leverage “Big Brain” mode for reasoning that employs additional computing. xAI describes the reasoning models as best suited for mathematics, science, and programming questions. (One of the engineers let it slip that Grok 3’s reasoning model was trained exclusively on maths and coding).
Now for the record we have four versions of Deep Research, and a Deep Search product not to be confused with DeepSeek-R1.
That’s the grand update from xAI in a rather patchy demo if I can say so myself where I struggled to understand some of these brilliant folk and their explanations.
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