The startup hopes to raise several billion dollars in the new round of funding, the Wall Street Journal reported, adding that discussions are at an early stage, meaning terms could change or talks could fall apart.

XAI raised $6 billion in a Series B funding round in May, reaching a post-money valuation of $24 billion, backed by investors including Andreessen Horowitz and Sequoia Capital.

Musk, the world's richest man, launched xAI in July 2023 as an alternative to OpenAI's ChatGPT.

In March, xAI announced it would open source its ChatGPT competitor, “Grok,” giving the public free access to test the code behind the technology, linking xAI with companies like France’s Meta and Mistral, which also have open-source AI models.

Companies like Microsoft-backed OpenAI and Alphabet's Google are among those leading the fierce race to dominate generative AI, driving significant investments and innovation in a rapidly evolving landscape.

In early October, OpenAI raised $6.6 billion in funding from investors, potentially valuing the company at $157 billion and cementing its position as one of the most valuable private companies in the world.