Elon Musk‘s artificial intelligence (AI) company, xAI (PC:XAIIQ), is raising $10 billion in a new funding round that would value the startup at an eye-popping $200 billion, according to sources cited by CNBC. This makes xAI one of the most valuable startups globally.
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This significant funding round is another sign of the soaring investor interest in companies developing AI models. Recently, Amazon (AMZN)-backed Anthropic raised $13 billion at a $183 billion valuation. Also, in August 2025, OpenAI (PC:OPAIQ) was in early talks for a stock sale that could value the company at around $500 billion.
It must be noted that Musk reportedly raised $10 billion in a mix of debt and equity at a valuation of around $150 billion in July 2025. Further, the company secured major backing through two $6 billion equity rounds in May and November 2024 from investors including Sequoia Capital, Valor Equity Partners, and Kingdom Holding Company.
Here’s How xAI Might Spend Its Billions
Musk’s xAI is expected to use the funds to expand its AI infrastructure to support its ambitious AI goals. The capital will likely be used to develop data centers equipped with high-performance GPUs, which are essential for training large language models like Grok.
By investing in its own compute facilities, xAI aims to reduce reliance on third-party cloud providers and gain control over performance and costs.
The company will also use the money to attract and retain the highly paid talent necessary to compete in the competitive AI landscape.
Musk has been actively seeking capital for xAI to keep up with major tech players such as OpenAI, Alphabet (GOOGL), and Meta Platforms (META) have been investing billions in AI infrastructure and data centers.
What Is the Prediction for Tesla Stock?
When it comes to Elon Musk’s companies, most of them are privately held. However, retail investors can invest in his most popular company, Tesla (TSLA).
On TipRanks, TSLA stock has a Hold consensus rating based on 15 Buys, 12 Holds, and eight Sells assigned in the past three months. Furthermore, the average TSLA price target of $323.94 per share implies 23.92% downside risk.
