Musk’s xAI secures $20 billion funding backed by major investors

Elon Musk’s artificial intelligence company xAI said it raised $20 billion in a new funding round. The amount exceeded a prior target of $15 billion.

It was reported in November that the financing would value the startup at about $230 billion. After an initial report said the company was raising $15 billion, Musk called that report false in a post on X.

The investors included Nvidia and Cisco Investments. Longtime backers of Musk-led companies also participated, including Valor Equity Partners, StepStone Group, Fidelity, Qatar Investment Authority, Abu Dhabi’s MGX, and Baron Capital Group.

Both Nvidia and Cisco work with xAI as vendors and strategic partners. The company did not disclose additional terms of the financing.

Artificial intelligence startups reached high valuations in 2025 as companies raised large sums to support demand for foundational models. In October, OpenAI completed a $6.6 billion share sale at a $500 billion valuation. A month later, Anthropic was valued at around $350 billion, with funding from Microsoft and Nvidia.

Musk’s AI venture now owns and operates the social network X. The companies merged in March, bringing the platform formerly known as Twitter under the xAI umbrella.

The company is facing new regulatory scrutiny in Europe, India, and Malaysia. Authorities opened probes after the Grok chatbot generated sexualized images of children and non-consensual intimate images of adults, mostly women. The images were widely shared by users on X.

Musk is centering xAI’s infrastructure expansion in Memphis, Tennessee. The data centers rely on natural gas-burning turbines for power. Local researchers have said emissions from the facilities contributed to air quality concerns in nearby communities.

Despite the controversies, xAI recently secured a contract with the Department of Defense. The department added Grok to its AI agents platform. Grok is also used by prediction betting platforms Polymarket and Kalshi.