AI Valuation

Former Meta executive Nick Clegg suggests the AI sector may be headed for a market correction due to “unbelievable, crazy valuations” and the rapid pace of investment. He questions whether current valuations accurately reflect the underlying potential, highlighting the need for hyperscalers to realize returns on massive infrastructure investments. While acknowledging AI’s potential, Clegg expresses skepticism about “artificial superintelligence,” advocating for a more measured approach and noting that the adoption of AI may be slower than technologists predict.

Reports suggest xAI, Elon Musk’s AI startup, is in talks to raise $10 billion, potentially valuing the company at $200 billion, amidst a competitive AI landscape with soaring valuations for OpenAI and Anthropic. However, Musk has denied these reports as “fake news,” disputing the immediate capital raise. xAI’s Grok chatbot has faced controversy, trailing behind competitors in capabilities. xAI merged with X in an all-stock transaction and is investing heavily in AI infrastructure, including acquiring 1 million AI chips and building a large AI computer cluster in Memphis. Musk opposes a merger between xAI and Tesla.