Name: Elon Musk’s xAI closes $20 billion funding round
Uploaded: 2026-01-07T18:27:24.487Z
Duration: 3 min 57 s
Description: CNBC’s Kate Rooney reports on Elon Musk’s xAI closing $20 billion in new funding.

CNBC’s Kate Rooney reports on Elon Musk’s xAI closing $20 billion in new funding.

Elon Musk's AI company XAI has completed a $20 billion funding round, with most of the investment coming from Musk's inner circle, including key board members, major investment firms, and Middle Eastern wealth funds. Unlike other AI startups such as OpenAI and Anthropic, XAI's fundraising process was conducted privately and focused on long-term confidence in Musk's leadership rather than immediate revenue goals.

The funding will be used to expand XAI's data center infrastructure and acquire advanced chips, with support from strategic backer NVIDIA. Despite optimism about integrating XAI's technology into Musk's other businesses, the company currently lacks a significant enterprise presence and faces controversy over content moderation in its Grok AI model, which may impact partnerships with major corporations.

Elon Musk’s xAI closes $20 billion funding round

Another massive funding round in AI with Elon Musk's XAI, just closing an upsized $20 billion round. For today's Tech Check, Kate Rooney is back. She has more on why this one is different than the rest. First of all, welcome back, Kate. It's so good to see you and congrats on second baby. Thank you, Sarah. It's great to see you. Great to be back. And this one, this funding round we're talking about, it is similar to others, other mega rounds we've seen from OpenAI and Anthropic, but gotta say, XAI is different for a few reasons. So for one, Musk's world is extremely insular. So if you look at the cap table for this round, it's mostly his inner circle. Notably, Valor's Antonio Gracias, close friend, Tesla board member, you've got Ron Barron, Fidelity with pretty deep ties to Musk as well, and Emirati and Qatari wealth funds. Those I'm talking to say, this group doesn't underwrite in a traditional way when you think about it. It's not the near-term revenue goals. It's more about muscle memory for this group and conviction in Musk's ability to execute. So one person telling me, XAI, they don't really go out and publicly fundraise like you see in Silicon Valley. You compare that to OpenAI, Anthropic. Those rounds are a knife fight, as one person told me, widely known when they're out raising, and it is an absolute battle to get in. XAI's strategy overall is different. They say in a press release yesterday, they're gonna be competing for enterprises. There are some questions over Fortune 500 companies, their willingness to partner, given some of the controversy around XAI and Grok. I also spoke to some competitors, some investors who did point out, XAI, they have almost no enterprise footprint, noticeably at this point. It's been a profitable battleground though for OpenAI and Anthropic. There is some optimism about Musk's ability to weave XAI and Grok into his own enterprises. You got Tesla, robots, SpaceX. We've already seen XAI merge with X, formerly Twitter. NVIDIA, we should point out, also a strategic backer here. A bulk of this money is going full circle back into their H100 chips, and the money is also gonna help Musk expand his data center footprint. This is really key, folks I've talked to. Are you building data centers fast? That could actually be XAI's moat. Musk has a history a lot of people know of pushing technical limits and moving faster. What about the models themselves? What do we know about how they stack up with some of these other big competitors? It's interesting. I was talking to somebody who said, the models at this point, there's been this argument over are they a commodity or not? They don't stack up to OpenAI, Gemini, Anthropic in the same way. That is sort of the consensus view. It's used within X and Twitter. The moat here is sort of like a core weave. Somebody described it as, if you're gonna look at the business model here, it could be the type of thing where they're building these data centers. They're gonna start competing more with an AWS. They're sort of betting that they can build infrastructure the fastest. They've also got this race, this battle for H100s. They might actually be ahead if you look at sort of that side of it. I would say on the model side, they're not really seen as a leader here, but it's about technical talent. If Musk can compete on sort of recruiting people, they could gain an edge and you sort of blink and you got somebody moving into the front row. So it'll be interesting to see in 2026 who is sort of seen as leader. I don't know, they could be a dark horse. We'll see what happens. Kate, you mentioned some of the controversies. Do we know why they haven't taken a firmer stance against Grok's ability to create, in some cases, fake porn of women without their consent? We don't know. I wouldn't dare to guess that. I think it's sort of subjective. I mean, there are people that sort of use X on Twitter within sort of that ecosystem and like the ability that there's not as much censorship, there's not as much oversight. So that is more speculation. I couldn't say why they haven't come out more strongly and pushed back against that, but I would say that is the number one controversy if you look at a Fortune 500. Wanting to partner with these guys, that is gonna be top of mind for any company wanting to use this model. They're gonna have to think about that.

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