Elon Musk’s artificial intelligence company xAI announced Tuesday that it has raised $20 billion in a Series E funding round, surpassing its initial $15 billion target. The round included participation from Valor Equity Partners, StepStone Group, Fidelity Management & Research Company, and the Qatar Investment Authority, the company said. Nvidia and Cisco also joined as strategic investors, with their backing expected to help xAI expand its computing capacity.
xAI, which is currently training its next-generation Grok 5 model, said it plans to use the fresh capital to build out infrastructure, accelerate the development and deployment of AI products, and fund additional research. The company added that it ended 2025 with more than 1 million H100 GPU equivalents across its Colossus I and II supercomputers, according to Business Insider. The funding comes nearly a year after Musk announced that xAI had acquired social media platform X in an all-stock deal.
READ: Musk’s Grok AI may violate App Store rules over inappropriate content in 12+ app (July 17, 2025)
According to Reuters, investor appetite for artificial intelligence remains strong despite growing concerns about a potential bubble, as companies continue to pour money into computing power and advanced models. xAI has rapidly expanded its data-center footprint to train more capable systems as it seeks to close the gap with rivals such as OpenAI’s ChatGPT and Alphabet’s Gemini.
Musk’s AI venture now owns and operates the social network X following its merger with the platform, formerly known as Twitter, in March.
The latest fundraising comes even as xAI faces mounting backlash over its chatbot Grok, which generated sexualized images of children and non-consensual intimate images of adults, mostly women. The images were widely shared on X, prompting regulatory probes by authorities in Europe, Malaysia, and India.
Musk has centered xAI’s infrastructure expansion in Memphis, Tennessee, where the company’s data centers rely on natural gas–burning turbines for power. According to local researchers, the facilities have raised concerns among nearby residents, as emissions linked to the turbines have contributed to air-quality issues in the area.
Despite the controversies, xAI recently secured a deal with the U.S. Department of Defense, which added Grok to its AI agents platform. Grok is also the primary chatbot used by prediction and betting platforms Polymarket and Kalshi.
The funding round highlights the extraordinary valuations reached by artificial intelligence companies in 2025, as firms raise massive sums to meet surging demand for foundational models. In October, OpenAI closed a $6.6 billion share sale at a $500 billion valuation, and a month later Anthropic was valued at around $350 billion, with backing from Microsoft and Nvidia.