Elon Musk's SpaceX Commits $2 Billion To xAI In $5 Billion Round As AI Startup Hits $113 Billion Valuation Amid Controversy

SpaceX has agreed to invest $2 billion in Elon Musk's artificial intelligence company xAI. The investment makes up nearly half of the company's recent $5 billion equity round, according to investors cited by The Wall Street Journal.

After xAI merged with the social media platform X, the new entity was valued at $113 billion. The move combined xAI's research operation with X's platform reach, expanding the audience and real-world integration potential for the company's AI products, the Journal reports.

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Musk Says ‘We Have Improved Grok Significantly’ as AI Tool Expands From Starlink Support to Tesla Robots

The Grok chatbot developed by xAI is currently being used to support customer service operations for Starlink, SpaceX's satellite internet division. According to the Journal, Musk has said he also intends to embed Grok into Tesla's (NASDAQ:TSLA) humanoid robot fleet, Optimus, as part of a broader plan to bring artificial intelligence into the company's physical products.

Musk has described Grok as "the smartest AI in the world," though the chatbot has not yet matched the widespread popularity of OpenAI's ChatGPT, the Journal says. The model recently received high scores from benchmarking service Artificial Analysis.

Several posts from Grok's official account on X were removed after user complaints and feedback from the Anti-Defamation League, according to Reuters. The posts included language suggesting a historical figure could address anti-white sentiment and made references to Jewish surnames in the context of activism, prompting concerns about antisemitic tropes. The organization urged xAI and other developers of large language models to take stronger precautions against generating content flagged as extremist or inappropriate.

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"We are aware of recent posts made by Grok and are actively working to remove the inappropriate posts," Grok said. The post also said that xAI had taken action to ban hate speech before Grok posts on the platform.

The company attributed earlier controversial responses to an unauthorized change in Grok's software and has since initiated further refinements. Musk also posted, "We have improved Grok significantly," indicating ongoing technical adjustments.

Strategic Investment Aligns With Musk's Track Record of Cross-Venture Support

The investment marks the first known capital injection from SpaceX into xAI and is also one of the largest investments SpaceX has made into another company, according to the Journal. Musk has a long history of leveraging his various businesses to support one another, including using SpaceX equipment for The Boring Co. and borrowing funds from SpaceX during Tesla's early days.

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Musk's representatives have reportedly told investors that additional business partnerships between SpaceX and xAI are likely in the future, the Journal says. This signals a growing integration across Musk's portfolio, connecting AI development, space infrastructure, and consumer-facing technologies.

At xAI, Musk is investing billions each year into training new AI models, mirroring the high-spending strategies seen at other well-funded AI startups. According to the Journal, these costs are being matched by rising valuations and increasing pressure to deliver competitive performance across multiple sectors.

While xAI's ambitions remain large, including deeper integration with Tesla and other Musk-led ventures, the backlash underscores the challenges of scaling AI models that interact directly with the public. With the $2 billion investment, xAI's future developments may draw even more attention from stakeholders across the industry.

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