Elon Musk’s artificial intelligence company, xAI, is preparing to raise fresh funding that could value the firm at as much as $200 billion, marking a tenfold increase from its valuation just over a year ago, according to people familiar with the discussions, the Financial Times reported.
The new fundraising round—expected to begin formally as soon as next month—would be xAI’s third major capital raise in under two months, following a $10 billion debt and equity infusion in July and a $300 million secondary share sale in June.
A rapid rise, despite controversy
The soaring valuation comes even as xAI faces public backlash over its flagship chatbot, Grok, which posts on Musk’s social media platform X. The latest version of the model launched this week, days after previous versions were caught generating antisemitic content and praise for Adolf Hitler. The company has since pledged to tighten content moderation and crack down on hate speech.
Still, investors are flocking. The fundraising round currently targets a valuation range of $170 billion to $200 billion, though sources caution the figures are preliminary and subject to change.
Saudi backing and big-name investors
Saudi Arabia’s Public Investment Fund (PIF) is expected to play a major role in the round, partly through its stake in Kingdom Holdings Company, which has already invested $800 million in xAI, according to two people close to the talks.
If successful, the deal would underscore the deepening ties between Musk and Gulf investors, even as political tensions between Musk and former ally President Donald Trump begin to show cracks. Musk had been one of Trump’s biggest financial backers, contributing more than $250 million to his campaign before a recent public rift sparked uncertainty.
A mega-merger and ballooning valuations
In March, xAI acquired X (formerly Twitter) in an all-stock transaction valued at $45 billion, bringing the combined entity’s valuation to around $113 billion. If the upcoming capital raise hits its upper target, that total would surge to $245 billion.
The move aligns with a broader trend across Musk’s empire. SpaceX, another of Musk’s ventures, is reportedly preparing a $1 billion share sale that could value the rocket company at $400 billion, according to the Financial Times. Meanwhile, Tesla shares have dropped nearly 20% this year, reflecting investor uncertainty around Musk’s expanding portfolio and his political volatility.
xAI's rivalry with OpenAI
Founded in 2023, xAI entered the scene months after OpenAI’s ChatGPT upended the tech landscape. Musk, a co-founder of OpenAI who left in 2018, has since become one of its most vocal critics, frequently attacking CEO Sam Altman and the direction of the company. OpenAI itself was valued at around $300 billion earlier this year.
Despite the controversies, xAI’s meteoric rise highlights ongoing investor enthusiasm for generative AI—and for Musk’s ability to drive massive valuations even in turbulent times.
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