Elon Musk’s artificial intelligence company, xAI, said Tuesday that it had raised $20 billion from investors to fund its expansion in the race to train the most intelligent chatbot.
In a statement, xAI said it had sought to raise $15 billion but ended up getting more from eager investors. Two people with knowledge of the matter said the investment could push xAI’s valuation above $230 billion, which it was on track to hit when it was raising $15 billion. That would make xAI, founded in 2023, one of the fastest-rising companies in value for Musk.
The company said it would use the funding to “expand its decisive compute advantage” as it built data centers to power its technology and to “fuel groundbreaking research.”
The funding is part of a frenzy over AI companies, with investors plowing enormous sums into fast-growing startups at sky-high valuations. Nearly two-thirds of venture capital funding in the first nine months of 2025 went to AI companies, according to PitchBook, which tracks private market funding.
Much of that shift has been driven by the largest AI startups, including OpenAI, Anthropic and xAI. Together, these three “foundational model” companies have a private market value of nearly $1 trillion.
Investors in xAI’s latest funding included Fidelity, the Qatar Investment Authority and Valor Equity Partners, a firm led by Musk’s friend and former Tesla board member Antonio Gracias. Nvidia, the maker of AI chips, also participated. In total, xAI has raised more than $42 billion, according to PitchBook.
Musk was early to AI as a co-founder of OpenAI, which makes the ChatGPT chatbot. But he severed ties with OpenAI several years ago after disagreements with other founders, including Sam Altman, its CEO.
By the time Musk founded xAI, OpenAI and Google had developed products that could generate text and photos on demand. To catch up, Musk spent aggressively on building data centers in Memphis, Tennessee, and developed a chatbot, Grok. Grok, which Musk designed to be edgier than its competitors, has provoked outrage as it has praised Adolf Hitler, parroted Musk’s personal views and generated nonconsensual nude images of women.
A new model, Grok 5, will be released early this year, xAI has said. Musk posted on his social platform X in October that the model had a 10% chance of reaching artificial general intelligence, a benchmark that would allow it to perform tasks like a human.
Musk has sued OpenAI, claiming the company stole trade secrets and poached employees from xAI. Separately, he sued OpenAI and Apple, accusing them of devising an “anticompetitive scheme” to prevent Grok from overtaking ChatGPT in Apple’s App Store. Both suits are ongoing.
(The New York Times has sued OpenAI and Microsoft for copyright infringement of news content related to AI systems. OpenAI and Microsoft have denied those claims.)
This article originally appeared in The New York Times.
