TLDR

  • Elon Musk’s xAI obtained $20 billion in Series E funding, surpassing its initial $15 billion target.
  • Major investors consist of Nvidia, Cisco, Fidelity, Qatar Investment Authority, and Valor Equity Partners.
  • The funding values xAI at approximately $230 billion, making it one of the most valuable AI startups.
  • The money will be used to fund infrastructure expansion, the development of Grok 5, and computing capacity in Memphis data centers.
  • xAI merged with X (formerly Twitter) in March and recently secured a contract with the Department of Defense.

Elon Musk’s artificial intelligence company xAI announced on Tuesday that it raised $20 billion in its Series E funding round. The amount exceeds the company’s original target of $15 billion.

The funding round values xAI at around $230 billion. This makes it one of the most valuable AI startups globally.

Major technology companies and Cisco Investments joined as strategic investors. Other participants include Valor Equity Partners, StepStone Group, Fidelity Management & Research Company, and Qatar Investment Authority.

Abu Dhabi’s MGX and Baron Capital Group also contributed to the round. Many of these investors have supported Musk’s companies in the past.

Both Nvidia and Cisco work with xAI as vendors and strategic partners. Their investment will assist xAI in expanding its computing capacity.

The company plans to utilize the funds for several purposes. These include building infrastructure, accelerating AI product development, and funding research.

xAI is currently training its next-generation model called Grok 5. The company aims to narrow the gap with competitors like OpenAI’s ChatGPT and Gemini.

Infrastructure Expansion in Memphis

xAI has focused its infrastructure buildout in Memphis, Tennessee. The company operates data centers there that use natural gas-burning turbines as a power source.

These facilities have received criticism from local residents. Emissions from the turbines have contributed to air quality issues in the area, according to local researchers.

Merger and Partnerships

xAI merged with X, the social network formerly known as Twitter, in March. The company now owns and operates the platform.

The AI startup recently secured a contract with the Department of Defense. The DoD added Grok to its AI agents platform.

Grok also serves as the main chatbot for prediction betting platforms Polymarket and Kalshi. This gives xAI presence across multiple sectors.

Regulatory Scrutiny

The company faces regulatory probes in Europe, India, and Malaysia. These investigations follow incidents where Grok generated inappropriate images.

The chatbot created sexualized images of children and non-consensual intimate images of adults, mostly women. Users shared these images widely on X.

AI Investment Trends

Investor demand for AI deals remains robust in early 2026. Companies continue to spend heavily on computing power and new models despite warnings of a market bubble.

Other AI startups have also raised large amounts recently. OpenAI completed a $6.6 billion share sale in October at a $500 billion valuation.

Anthropic was valued at around $350 billion in November. Microsoft and Nvidia provided capital for that round.