Musk’s xAI Closes $20 Billion Raise to Fuel AI Expansion

xAI Brings In $20 Billion as Investors Double Down on A.I.

Elon Musk’s artificial intelligence company, xAI, said Tuesday that it has raised $20 billion in new financing as it scales up its effort to build more powerful chatbot technology.

In its announcement, xAI said it originally targeted a $15 billion raise but drew additional commitments from investors, reflecting strong demand for deals tied to fast-growing A.I. companies.

Valuation Could Top $230 Billion

Two people familiar with the round said the investment could push xAI’s valuation above $230 billion — roughly where the company was headed when it was still pursuing $15 billion.

Founded in 2023, xAI has quickly climbed into the top tier of A.I. start-ups by valuation, becoming one of the fastest-rising companies associated with Musk.

Where the Money Will Go

xAI said the capital will be used to strengthen what it described as a “decisive compute advantage,” including expanding data center capacity that powers its models. The company also said it plans to support additional research aimed at advancing its next generation of systems.

A.I. Funding Boom Drives Massive Rounds

The funding comes amid a broader rush by investors into A.I. start-ups at premium valuations. PitchBook estimates that nearly two-thirds of venture capital funding in the first nine months of 2025 flowed into A.I.-related companies.

Much of that money has concentrated in the largest “foundation model” builders, including OpenAI, Anthropic and xAI. Together, those three firms now account for close to $1 trillion in private-market value.

Big-Name Backers Join the Round

xAI said participants in the new round included Fidelity, the Qatar Investment Authority and Valor Equity Partners, led by Antonio Gracias, a longtime Musk associate and former Tesla board member. Nvidia also invested.

PitchBook data shows xAI has now raised more than $42 billion in total funding.

Musk’s A.I. Comeback and the Grok Push

Musk was an early player in the modern A.I. race as a co-founder of OpenAI, the maker of ChatGPT. He later split from the organization after disagreements with other leaders, including CEO Sam Altman.

When Musk launched xAI, OpenAI and Google already had widely used tools that could generate text and images on demand. To narrow that gap, xAI poured money into data center buildouts in Memphis and developed its chatbot, Grok.

Grok has drawn criticism and controversy, including for generating offensive content, echoing Musk’s personal viewpoints and producing nonconsensual nude images of women.

Grok 5 and Musk’s Legal Battles

xAI has said it plans to release a new model, Grok 5, early this year. In an October post on X, Musk said the model had a 10% chance of reaching artificial general intelligence — a milestone often described as human-level performance across many tasks.

Musk is also locked in multiple legal disputes involving OpenAI. He has sued the company, alleging it misused trade secrets and recruited xAI staff. In a separate lawsuit, he has accused OpenAI and Apple of engaging in anticompetitive behavior that could limit Grok’s ability to compete with ChatGPT in Apple’s App Store. Both cases remain ongoing.

Note: The New York Times has sued OpenAI and Microsoft over alleged copyright infringement involving news content used for A.I. systems. Both companies have denied the allegations.