Elon Musk and his social media platform X’s built-in AI chatbot Grok have been in hot water over its mass creation of non-consensual sexualised images of women and children this past week. However, that didn’t stop the billionaire’s artificial intelligence company, xAI, from raising $20 billion from investors as part of a funding round focussed on expanding its AI infrastructure.
In a statement released online, xAI announced that it had completed its Series E funding round. As the company raised $20 billion in funds, it ended up exceeding its own previously set $15 billion target. Notable tech giants and others participated in the said round, thereby doubling down on expediting progress in building advanced AI.
Key investors tied to Elon Musk’s xAI’s Series E funding round
“Investors participating in the round include Valor Equity Partners, Stepstone Group, Fidelity Management & Research Company, Qatar Investment Authority, MGX and Baron Capital Group, amongst other key partners,” xAI shared in an official news release statement.
“Strategic investors in the round include NVIDIA and Cisco Investments, who continue to support xAI in rapidly scaling our compute infrastructure and buildout of the largest GPU clusters in the world.”
Citing two people with knowledge of the matter, The New York Times indicated that the new investment round could push xAI’s valuation above $230 billion, a target it would have hit even with the initial $15 billion goal.
What’s next for Elon Musk’s xAI?
In its proud statement, xAI foregrounded that 2025 had been a “year of breakthrough momentum, with the team advancing key initiatives surrounding data centres, Grok 4 Series, Grok Voice, Grok Imagine and Grok on X. As for the road ahead, it revealed that its new model Grok 5 is currently in training.
Back in October, Musk posted in X that Grok 5 had a 10% chance of attaining artificial general intelligence, which would allow it to perform tasks like a human being.
“We are focused on launching innovative new consumer and enterprise products that harness the power of Grok, Colossus, and 𝕏 to transform how we live, work, and play,” it stated.
And so, the financing achieved through the funding round will help the company boost its infrastructure buildout and make way for rapid development and deployment of transformative AI products. As the banner aims for its AI products to reach billions of users, the funds will also aid groundbreaking research contributing to the company’s core mission: “Understanding the Universe.”
xAI’s funding round news emerges amid Grok deepfake crisis
The xAI Series E funding round may have given Elon Musk’s company a positive push, but one can’t ignore the massive backlash its chatbot Grok is facing. While the AI giant had already been under fire for generating misinformation and antisemitic content, the past week saw Grok pushing out potentially illegal sexual material on the Internet as well.
Responding to tens of thousands of user prompts on X requesting it to remove women’s clothing in images, X’s built-in AI chatbot ended up digitally stripping not just women but also children. The sexualised undressing spree flooded the platform with nearly nude images of people.
As the bot continued disrobing people through the generation of deepfakes in bulk without their consent, it prompted global backlash and warnings from international governments.
Last week, the Indian government ordered a full-fledged review of the AI chatbot so that it would stop generating content featuring “nudity, sexualisation, sexually explicit or otherwise unlawful content.” Indian authorities further asked the platform to submit a report mapping out corrective actions within 72 hours. They threatened action under criminal and IT laws in case the company failed to comply.
Several other countries have joined in to hit Elon Musk’s Grok with similar warnings of potential regulatory action.
Even US Technology Secretary Liz Kendall called on Musk’s X to urgently deal with the “absolutely appalling” situation, adding “we cannot and will not allow the proliferation of these degrading images,” as per the BBC.