Elon Musk’s artificial intelligence company, xAI, has raised $20 billion from investors, underscoring growing enthusiasm for large-scale AI models as competition intensifies among leading chatbot developers.
In a statement on Tuesday, xAI said it initially sought $15 billion but exceeded its target due to strong investor demand. People familiar with the matter said the funding round could value the company at more than $230 billion, placing xAI among the most valuable privately held technology firms globally just two years after its founding.
The company said the capital would be used to expand its computing infrastructure and accelerate research as it builds out data centres to support the training of increasingly powerful AI models.
The funding comes amid a broader surge in AI investment. Nearly two-thirds of global venture capital funding in the first nine months of 2025 went to AI-focused companies, according to data from PitchBook. Much of that capital has flowed into so-called foundational model developers, including OpenAI, Anthropic and xAI, which together now command a combined private valuation approaching $1 trillion.
Investors in xAI’s latest round include Fidelity, the Qatar Investment Authority, Valor Equity Partners and Nvidia, the leading supplier of AI chips. PitchBook estimates that xAI has now raised more than $42 billion in total funding.
Musk, who co-founded OpenAI before parting ways with the company over strategic disagreements, launched xAI in 2023 as a direct challenger to ChatGPT and Google’s Gemini. To narrow the gap, xAI has invested heavily in computing infrastructure, including large data centre projects in Memphis, Tennessee.
Its flagship chatbot, Grok, has drawn controversy for producing offensive outputs, including praise for Adolf Hitler, repetition of Musk’s personal views and the generation of non-consensual explicit images. Despite the criticism, Musk has positioned Grok as a more provocative alternative to rival chatbots.
xAI has said it plans to release Grok 5 early this year. In a post on his social media platform X, Musk claimed the model had a “10% chance” of reaching artificial general intelligence, a loosely defined benchmark for human-level task performance.
Musk is also embroiled in legal disputes with OpenAI, alleging the company misappropriated trade secrets and recruited xAI staff. He has separately sued OpenAI and Apple, accusing them of anti-competitive practices designed to block Grok’s growth. Both cases are ongoing.
