Elon Musk's ChatGPT rival xAI raises $20 billion in funding; investors include Nvidia which has promised up to $100 billion to Sam Altman's OpenAI

Elon Musk’s artificial intelligence (AI) startup, xAI, has raised $20 billion in its latest funding round. One company reportedly investing in xAI is Nvidia. The chipmaking giant’s participation in funding the Musk-owned startup is notable, as the company also maintains a partnership with one of xAI’s biggest rivals, OpenAI. In September 2025, Nvidia committed up to $100 billion to build AI infrastructure for Sam Altmann-led OpenAI, a project that aims to deploy 10 gigawatts of computing power by late 2026. According to a CNBC report, apart from Nvidia, other investors in xAI’s latest funding round also include Cisco Investments, alongside existing backers such as Fidelity, the Qatar Investment Authority, and Abu Dhabi’s MGX. This funding round even exceeds the company’s earlier $15 billion reported goal and brings its valuation to approximately $230 billion, the report added. Previously, Musk also called reports of this $15 billion funding target "false" on the microblogging site X (formerly Twitter) before the round closed at $20 billion. xAI now owns and operates X, following Musk's merger of the companies in March 2025.The company is reportedly planning to use the capital to expand its data centres and develop future versions of its Grok AI models. xAI recently disclosed that its "Colossus" supercomputer now uses over one million AI chips to train its systems. This funding reflects the high valuations currently seen in the AI sector. In late 2025, OpenAI reached a valuation of $500 billion, while Anthropic was valued at $350 billion. The company is facing new investigations by authorities in Europe, India and Malaysia after its Grok chatbot created sexual images of children and intimate images of adults without their consent, mostly women. Users shared these images widely on X.Musk is building xAI's main data centres in Memphis, Tennessee. The data centres use natural gas-burning turbines for power, which has upset many nearby residents. According to local researchers, the emissions from these turbines are causing air quality problems in the area.Despite these controversies, xAI got a deal with the Department of Defense, which recently added Grok to its AI platform. Grok is also the main chatbot for prediction betting platforms Polymarket and Kalshi.