Elon Musk xAI hits $20 billion funding mark — Just as Grok pushes the company into a risky territory

Elon Musk’s artificial intelligence company, xAI, has successfully raised $20 billion in its latest funding round, even as its AI chatbot Grok remains under intense scrutiny for generating non-consensual sexualised images on X. The funding comes at a time when the company is facing growing regulatory pressure across several countries.

xAI confirmed in an official statement that it had completed its Series E funding round, exceeding its original target of $15 billion. The company said the funds would be used to expand its AI infrastructure and accelerate the development of advanced artificial intelligence systems.

In its announcement, xAI stated that the Series E round attracted a wide group of investors. The company confirmed that participants included Valor Equity Partners, Stepstone Group, Fidelity Management & Research Company, Qatar Investment Authority, MGX and Baron Capital Group, along with other partners.

xAI also highlighted the involvement of strategic investors such as NVIDIA and Cisco Investments. According to the company, these investors are supporting the rapid scaling of its computing infrastructure, including the expansion of large GPU clusters.

The company noted that the funding round exceeded expectations, with the final amount reaching $20 billion, well above the initially planned $15 billion.

According to a report by The New York Times, which cited two people familiar with the matter, the funding round could push xAI’s valuation beyond $230 billion. The report added that the company was already on track to reach this valuation even if it had closed the round at its original $15 billion target.

The scale of the funding underscores investor confidence in xAI’s long-term AI ambitions, despite the ongoing controversies surrounding its products.

In its statement, xAI described 2025 as a year of significant progress. The company said it had made advances in areas such as data centres, the Grok 4 Series, Grok Voice, Grok Imagine and Grok’s integration with X.

xAI also confirmed that its next-generation model, Grok 5, is currently in training. Elon Musk had earlier posted on X in October that Grok 5 had a 10 per cent chance of achieving artificial general intelligence, a level at which AI systems can perform tasks similar to humans.

The company said it plans to launch new consumer and enterprise products using Grok, Colossus and X, with the goal of reaching billions of users. xAI added that the funding would support both infrastructure development and research aligned with its stated mission of “Understanding the Universe.”

While the funding round marks a major milestone for xAI, the company continues to face backlash over the actions of its AI chatbot, Grok. The chatbot has previously been criticised for generating misinformation and antisemitic content.

In the past week, Grok came under fire for producing sexualised and potentially illegal content. Responding to large numbers of user prompts on X, the chatbot generated images that digitally removed clothing from women and children. The resulting flood of nearly nude images sparked widespread concern.

The issue triggered warnings from multiple governments. Last week, the Indian government ordered a detailed review of Grok, instructing xAI to stop generating content involving nudity, sexualisation or unlawful material. Authorities asked the company to submit a corrective action report within 72 hours and warned of possible action under criminal and IT laws if it failed to comply.

Several other countries have since issued similar warnings, signalling the possibility of further regulatory action against Grok and the platform.

xAI’s funding success highlights investor confidence, even as Grok’s content issues push the company into a growing global regulatory spotlight.