Elon Musk's xAI Raises $20B With Support From Nvidia and Cisco

AI startup xAI has announced it has raised $20 billion in a late-stage funding round, marking one of the largest single fundraising events in the history of artificial intelligence ventures.

The Elon Musk-backed company confirmed that NVIDIA and Cisco Systems participated in its Series E round, with additional investments from Valor Equity Partners, Stepstone Group, Fidelity Management & Research, Qatar Investment Authority, MGX, and Baron Capital Group. This latest financing follows earlier reports from CNBC in November indicating that xAI’s valuation could reach $230 billion in its upcoming capital raise.

Proceeds from the round will be used to expand xAI’s AI infrastructure. The company operates Colossus, a massive supercomputer launched in September 2024 for training its flagship Grok family of large language models. Initially powered by 100,000 GPUs, xAI revealed today that Colossus now runs on more than one million H100 GPU-equivalent devices.

Last week, Musk announced the acquisition of a new data center to further scale computing capacity. The facility, reportedly a former warehouse near Memphis, is strategically located close to a power plant currently under construction by xAI to meet the growing energy demands of Colossus.

Musk stated that planned upgrades will increase the supercomputer’s power consumption to 2 gigawatts—enough electricity to support over one million households—highlighting the immense scale of xAI’s operations.

The CEO also praised NVIDIA’s newly unveiled Rubin GPU architecture, suggesting through recent comments and investment ties that these next-generation chips may play a critical role in scaling Colossus. Rubin is expected to run inference workloads at just one-tenth the per-token cost of NVIDIA’s current Blackwell platform.

In addition to expanding infrastructure, xAI plans to launch new consumer and enterprise-focused products using the proceeds from this funding round.

Last month, the company introduced Grok Enterprise, featuring integration with Google Drive that enables employees to search files stored in the cloud via chatbot. This subscription-based offering also includes cybersecurity tools, customizable access controls, and support for customer-managed encryption keys to secure corporate data.

Over the coming months, xAI intends to broaden third-party service integrations beyond Google Drive, while introducing enhanced collaboration features and the ability to build custom AI agents tailored to specific business needs.

These updates are expected to coincide with the release of Grok-5, the next-generation LLM already in training as confirmed by the company today. Specific details about its launch timeline or feature set have not yet been disclosed.

This funding announcement comes shortly after OpenAI Group PBC secured $22.5 billion from SoftBank Group, part of a previously announced $40 billion fundraising initiative revealed in March. Like xAI, OpenAI is aggressively building out new data center infrastructure to support its large-scale AI model training efforts.