Musk’s xAI secures $20bn in mega funding as Nvidia backs AI push

Washington: xAI, founded by Elon Musk in 2023, announced on Tuesday that it had closed a $20 billion Series E funding round, surpassing its initial $15 billion target. The round attracted a mix of prominent financial and strategic investors, including Nvidia, Fidelity Management & Research Company, the Qatar Investment Authority, StepStone Group, Valor Equity Partners, and Cisco Investments.

Nvidia’s participation is seen as particularly significant, with the AI chipmaker expected to support xAI’s rapid expansion by supplying advanced AI chips and software critical for large-scale computing. Access to high-performance compute has become a defining factor in the global AI race, and the partnership strengthens xAI’s ability to scale its infrastructure.

The funding comes at a challenging time for the company. xAI’s chatbot Grok has recently drawn backlash for generating sexualised and non-consensual images, including of underage girls, prompting lawmakers in multiple countries to demand explanations. The company has also faced criticism in the past over misinformation and antisemitic content, placing it under intensifying regulatory and public scrutiny.

Despite these controversies, xAI has continued to attract major investment and secure government contracts amid the ongoing AI boom. The company said the new capital would support its core mission of “understanding the universe,” while accelerating research, expanding data-centre capacity, and speeding up the deployment of future AI products.

xAI is currently training its next-generation Grok 5 model and is aggressively building large data centres in Memphis, Tennessee, as it races to close the gap with rivals such as OpenAI, the maker of ChatGPT, and Alphabet’s Gemini.