Elon Musk's artificial intelligence startup xAI has closed an upsized $20 billion Series E funding round, exceeding its original $15 billion target as tech giants pour billions into the AI arms race despite mounting regulatory scrutiny and AI bubble warnings.
The company announced on Tuesday that it had completed the Series E round, with participation from heavyweight investors, including blue-chip investors such as Nvidia and Cisco Investments, as xAI scales what it claims are "the largest GPU clusters in the world."
Valor Equity Partners, Stepstone Group, Fidelity Management & Research Company, Qatar Investment Authority, MGX, and Baron Capital Group are among the other investors who joined the round.
The funding will accelerate xAI's infrastructure buildout and fuel development of consumer and enterprise products leveraging its Grok AI models and the X platform.
"It's worth asking whether X data, used as Grok model training data, could ultimately produce better models than the data that other large language model providers like OpenAI are training on," Joni Pirovich, founder and CEO of Crystal aOS (agent operating system), a compliance infrastructure layer for crypto firms, told Decrypt.
"The oversubscribed round shows that major backers are willing to bet the answer is yes, and want exposure to the upside if xAI can steal market share from OpenAI and increase consumer and enterprise use of Grok models,” she added.
Musk’s xAI said 2025 marked a year of “breakthrough momentum,” pointing to the expansion of its Colossus I and II data centers, which ended the year with more than one million H100 GPU equivalents, according to the statement.
The company is currently training Grok 5 while continuing to develop its image- and video-generation models through Grok Imagine, an AI-powered creative tool.
The platform is also "hiring aggressively" for mission-oriented individuals ready to make "a transformational impact on the future of humanity," it said in the statement.
The massive capital injection comes as xAI faces international backlash over its Grok chatbot's ability to generate non-consensual deepfakes and sexualized images of minors.
The European Commission recently condemned Grok's "Spicy Mode" for producing "illegal" and "appalling" content, while France, the UK, India, and Malaysia have launched separate investigations.
"AI misuse, and the necessary guardrails to prevent, detect, and remediate it, will continue to feature heavily over the next few years as standards and laws develop," Crystal aOS’s Pirovich said.
"It does not appear that xAI has announced any voluntary compliance with AI standards like ISO 42001, and xAI's public material tends to focus on model capability rather than model explainability,” she added.
Decrypt has reached out to xAI for further comment.
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