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Elon Musk is taking on ChatGPT — and xAI now has $20 billion more to do it

Cisco Investments and Nvidia were strategic investors in a newly announced funding round

By William Gavin

Published: Jan. 6, 2026 at 5:28 p.m. ET

Elon Musk’s xAI just secured $20 billion through a Series E funding round.Photo: Agence France-Presse/Getty Images

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xAI, founded by Elon Musk, raised $20 billion in Series E funding, exceeding its $15 billion target, with investors including Fidelity and Nvidia.
The company is expanding its Colossus data center in Memphis, Tenn., and is developing a second site, while aiming for almost 2 gigawatts of compute power.
xAI faces scrutiny over Grok’s safety guardrails, with Ofcom contacting X and xAI regarding reports of the chatbot generating illegal images.

xAI, the artificial-intelligence startup founded by Tesla CEO Elon Musk, said Tuesday that it had raised $20 billion as it continues to develop its Grok chatbot.

The company said its Series E funding round exceeded its $15 billion target. It raised funds from investors including Fidelity Management and Research, the Qatar Investment Authority, and Valor Equity Partners, an investment firm led by former Tesla

TSLA-4.14% board member Antonio Gracias. Cisco Investments and Nvidia were strategic investors, xAI said.

xAI did not disclose its new valuation. CNBC in November reported that the company was expected to close a $15 billion funding round at a $230 billion premoney valuation.Skip in 2s

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The capital raised will help xAI fund its cash-intensive infrastructure development, deploy a series of products and fuel research, the company said in a statement. “Congrats to the @xAI team and thank you to investors for your faith in our company,” Musk said in a post on X, which is owned by xAI.

The announcement comes as xAI has come under fire over a lack of safety guardrails for Grok, its large language model that has been integrated into X. On Monday, the U.K.’s Ofcom, which regulates social-media companies, said it had made “urgent contact” with X and xAI after reports that the Grok chatbot was producing “undressed images of people and sexualized images of children.”

In a statement over the weekend, X said it takes action against illegal content on the social-media platform by removing it, permanently suspending accounts and working with law enforcement. “Anyone using or prompting Grok to make illegal content will suffer the same consequences as if they upload illegal content,” the company said.

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xAI claims roughly 600 million monthly active users across the X and Grok apps. For comparison, rival AI firm OpenAI’s ChatGPT had about 700 million weekly active users as of September. Musk launched xAI in June 2023 to challenge OpenAI, which he helped found.

The company is currently training Grok 5, its next-generation version of the AI chatbot. The model, which Musk has said will “feel sentient,” was initially meant to debut by the end of 2025.

xAI is focused on expanding its Colossus data center in Memphis, Tenn., where it has installed over 1 million H100 graphic process unit (GPU) equivalents. The company is currently developing a second nearby site called Colossus 2 and purchased a third building last week, Musk said.

“xAI has bought a third building called MACROHARDRR,” Musk said on X last week. “Will take @xAI training compute to almost” 2 gigawatts, he added. One gigawatt is roughly enough to power some 750,000 homes.

xAI has become a major customer of Nvidia

NVDA-0.47%

, which supplies it with billions of dollars worth of chips. xAI is also working with Nvidia on a large data center being built in Saudi Arabia and is expected to adopt the chip maker’s new Vera Rubin line of chips, which are set to begin shipping later this year.