According to a report on The Wall Street Journal, SpaceX just committed $2 billion to xAI, Elon Musk’s artificial intelligence company. The deal makes up nearly half of xAI’s $5 billion equity round announced last month and represents the rocket company’s first known investment in the chatbot maker behind Grok.
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Musk has a long track record of moving capital, talent, and hardware across his empire, borrowing from SpaceX to fund Tesla (TSLA) in its early days. He used SpaceX infrastructure to launch The Boring Company. And in 2022, a $1 billion loan from SpaceX helped finance his acquisition of Twitter, now known as X. That money was paid back quickly, but the playbook is the same: leverage one company to speed up another.
Musk Links his AI Startup to SpaceX and Starlink
With this latest move, Musk is now aligning xAI with Starlink, SpaceX’s satellite internet service, where Grok powers customer support. He also says Grok will eventually help drive Tesla’s Optimus humanoid robot. For investors, this is a familiar pattern: What happens in one Musk company tends to spill over into the others.
However, Grok still trails ChatGPT from OpenAI and Gemini from Alphabet (GOOG). Since launching Grok-1 in late 2023, xAI has pushed out multiple upgrades. Grok-4, released this month, includes advanced language, vision, and coding capabilities. Musk claims it’s the “smartest AI in the world,” but real-world traction is limited. Recent antisemitic controversy over Grok’s outputs on X highlights the model’s moderation challenges.
Meanwhile, OpenAI continues to dominate the space with GPT-4o, and Google’s Gemini has shown steady improvements. These models have more users, developer support, and brand trust. Even if Grok is technically catching up, the gap in adoption and integration remains wide.
‘We Have Plenty of Capital’
SpaceX had more than $3 billion in cash recently, according to reports. But it’s also spending billions on its Starship rocket, which has faced setbacks. Tapping that balance sheet to back xAI adds exposure, and possibly reward, to SpaceX’s risk profile. xAI raised another $5 billion in debt alongside the equity, and Musk denies reports that it is seeking a $200 billion valuation. “We have plenty of capital,” he said in response.
Whether Grok ever rivals ChatGPT remains to be seen. But one thing is clear: Musk isn’t waiting for outside approval. He’s financing his AI vision from within.
Is Tesla a Buy, Sell, or Hold?
Back to Musk’s publicly traded company, Tesla, which currently boasts a Hold consensus rating from Wall Street analysts based on 36 reviews. The average price target stands at $295.80, suggesting a potential downside of 5.65%.
