Musk’s AI startup xAI to raise additional $12 billion in funding, WSJ reports

Elon Musk isn’t done fundraising just yet. Less than a month after his AI venture xAI raised $10 billion to supercharge Grok and build what he calls a “gigafactory of compute,” the company is reportedly eyeing another $12 billion in fresh capital.
According to The Wall Street Journal, xAI is working with Valor Equity Partners, the investment firm led by Musk ally Antonio Gracias, to line up the funding. Sources told the outlet that Valor is already in talks with lenders to make it happen.
“Just weeks after Musk’s xAI raised $10 billion through sales of stock and debt, the startup is working with a trusted financier to secure up to $12 billion more for its ambitious expansion plans,” The Wall Street Journal reported, citing people familiar with the matter.
This new round wouldn’t go into flashy marketing campaigns or office expansions. It’s reportedly earmarked for one thing: chips. Specifically, thousands of high-end Nvidia GPUs, which would be leased back to xAI for a massive data center dedicated to training and running Grok, the chatbot Musk wants to pit against OpenAI’s GPT-4.
Back in March, xAI merged with X (formerly Twitter) in a deal that valued the social media platform at $33 billion and xAI at a towering $80 billion. It’s unclear whether the more recent $10 billion raise moved that number higher. Musk’s team hasn’t commented.
Last year, CNBC reported xAI had quietly raised $6 billion at a $50 billion valuation. The latest $10 billion raise, led by Morgan Stanley, was “oversubscribed and included prominent global debt investors,” according to the bank.
The AI arms race in Silicon Valley isn’t slowing down. OpenAI secured $40 billion in March, bumping its valuation to $300 billion. Anthropic has crossed $61.5 billion and recently picked up a $2.5 billion credit line. Musk, who co-founded OpenAI but later soured on its direction, is determined to catch up—and maybe even flip the game.
Earlier this year, Musk and a group of backers made an eye-popping $97.4 billion bid to wrest control of OpenAI. Sam Altman didn’t engage.
Meanwhile, Grok has sparked its own share of controversy. The bot has made questionable references—like invoking “white genocide” in South Africa—and drawn criticism for its responses. Musk, unfazed, continues to push Grok as a counterweight to what he sees as biased AI tools built by competitors.
xAI launched in July 2023 with a mission to “understand the universe,” but its ambitions are firmly rooted here on Earth. The team includes heavy hitters from OpenAI, DeepMind, Microsoft Research, and Tesla—engineers who helped build breakthroughs like AlphaCode, GPT-3.5, and GPT-4.
Now, with another massive raise in the works, Musk is doubling down. The message is clear: if OpenAI has the model, xAI wants the infrastructure to beat it.
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