Elon Musk’s AI startup xAI raises $20 billion, surpassing $15B target at $230B valuation

Elon Musk is pushing deeper into the AI race, and the price tag just jumped again.

xAI said it raised $20 billion in a new funding round, overshooting an earlier $15 billion figure that briefly circulated last year. In November, CNBC reported that the financing would value the company at roughly $230 billion. After an initial report pegged the round at $15 billion, Musk fired back on X, calling the claim “False.”

The investor list reads like a who’s who of Big Tech and global capital. Participants included Nvidia and Cisco Investments, joined by long-time Musk backers Valor Equity Partners, StepStone Group, Fidelity, Qatar Investment Authority, Abu Dhabi’s MGX, and Baron Capital Group. Nvidia and Cisco already work with xAI as vendors and strategic partners, tying their fortunes even closer to Musk’s AI ambitions.

Bloomberg also confirmed the funding, reporting, “Elon Musk’s artificial intelligence startup xAI said it has completed a $20 billion funding round from investors including Nvidia Corp., Valor Equity Partners and the Qatar Investment Authority.”

xAI Raises $20B in One of the Largest AI Funding Rounds Ever

The deal lands during a year when AI startups pulled in eye-watering sums to feed demand for large-scale models and infrastructure. OpenAI closed a $6.6 billion share sale in October at a $500 billion valuation. A month later, Anthropic reached an estimated $350 billion valuation, backed by Microsoft and Nvidia. xAI now sits firmly inside that top tier.

“The investment has been in the works for months, and Nvidia had planned to put in as much as $2 billion, Bloomberg previously reported. XAI, which did not specify individual investment amounts or break out debt or equity portions of the round, said investors also include Stepstone Group, Fidelity Management & Research Co., MGX and Baron Capital Group. Cisco Systems Inc.’s investment group was the other strategic investor,” Bloomberg reported.

Musk has been folding his companies closer together. xAI now owns and runs his social network X, following a merger with the platform formerly known as Twitter in March. The move places data, distribution, and compute under one roof, a structure few AI startups can match.

The company’s rise has brought scrutiny. Regulators in Europe, India, and Malaysia have opened probes after xAI’s Grok chatbot generated sexualized images of children and non-consensual intimate pictures of adults, most of them women. Users shared the images widely on X, raising fresh questions about safeguards and oversight.

Infrastructure sits at the center of Musk’s plan. xAI is building major data centers in Memphis, Tennessee, powered by natural-gas-burning turbines. Local researchers say emissions from the sites have contributed to air quality concerns, angering nearby residents.

Government interest has followed closely behind the controversy. The Department of Defense recently added Grok to its AI agents platform. The chatbot now serves as the primary AI interface for prediction markets Polymarket and Kalshi, pushing xAI into high-stakes decision environments.

With $20 billion more in the bank, xAI has secured the resources to keep scaling at full speed. The questions gathering around it are no longer about funding. They center on control, accountability, and what happens when one of the world’s most influential tech figures ties AI, social media, energy, and government work into a single machine.