July 11 (Reuters) - Elon Musk's xAI is preparing to

raise more money from investors in a deal that could value the

artificial-intelligence company between $170 billion and $200

billion, the Financial Times reported on Friday, citing people

close to the discussions.

Saudi Arabia's PIF sovereign wealth fund is expected to play

a large role in the deal, according to the FT report. PIF holds

an indirect interest in xAI through its stake in Kingdom

Holdings Company, which has an $800 million investment in the

firm.

The talks were preliminary and the details could change, the

report said.

XAI and PIF did not immediately respond to Reuters

requests for comment.

Morgan Stanley said in late June that xAI had completed a $5

billion debt raise alongside a separate $5 billion strategic

equity investment, as the startup looks to expand its AI

infrastructure through data centers amid intense competition.

The AI startup acquired X, Musk's social media business

formerly known as Twitter, in March, valuing xAI at $80 billion

and X at $33 billion.

Musk launched xAI in July 2023 as an alternative to OpenAI's

ChatGPT, which in March said it would raise up to $40 billion at

a $300 billion valuation.

XAI expects to generate more than $13 billion in annual

earnings by 2029, according to numbers revealed by its banker

Morgan Stanley, Bloomberg News reported in June.

The company expects $1 billion in gross revenue by the

end of this year and plans to spend $18 billion on investments

in data centers going forward.