Elon Musk's artificial intelligence startup xAI is in advanced talks to raise a new funding round that could value the company at approximately $120 billion, a substantial increase from its $80 billion valuation just over a month ago. This development highlights the rapidly evolving and competitive AI landscape, particularly in comparison to OpenAI's recent $300 billion valuation. Concurrently, xAI is preparing to launch Grok 3.5, an upgraded version of its AI model, which has already been rolled out to some users in beta. Grok 3.5 features a one million token context window and capabilities based on first-principles reasoning. The new model is expected to deliver a fivefold increase in compute power compared to leading AI models from Google and Meta, positioning it as a potential challenger in the AI market. The launch of Grok 3.5 is anticipated to shake up AI rankings and enhance productivity tools, reflecting xAI's growing momentum in the sector.