Elon Musk's xAI raises $20 billion in Nvidia-backed funding round

Elon Musk’s artificial intelligence startup xAI announced Tuesday it has raised $20 billion in its latest funding round, surpassing its initial $15 billion target as the company accelerates development of its Grok AI models.

Founded by Musk, xAI competes in an increasingly crowded generative AI market against OpenAI, Google, and Anthropic, among others.

The substantial funding round underscores continued investor appetite for AI ventures despite broader questions about achieving returns on the massive investments being made.

The oversubscribed round drew investment from Valor Equity Partners, Stepstone Group, Fidelity Management & Research Company, Qatar Investment Authority, MGX and Baron Capital Group, among others, the company said.

AI juggernaut Nvidia also participated and will support xAI’s computing infrastructure expansion by supplying its highly prized AI chips and software.

The funding round came as Musk, who also owns the X social media platform, has been embroiled in controversy over the Grok AI tool.

Grok is facing a growing international backlash for allowing users to generate sexualised deepfakes of women and minors through a setting it calls Spicy Mode.

Announcing the funding round, xAI touted significant progress in 2025, including the deployment of what it claims are the world’s largest AI supercomputers.

The company’s Colossus I and II data centers in Memphis now house over one million high-performing GPUs, the AI chips from Nvidia that are supercharging AI development.

The startup has also rolled out its Grok 4 language models and Grok Voice, a real-time voice agent now available in Tesla vehicles.

According to xAI, its services reach approximately 600 million monthly active users across the X platform and Grok applications.

The company said it is currently training Grok 5 and plans to launch new consumer and enterprise products.