Elon Musk's SpaceX Invests $2 Billion in AI Startup xAI, Valuation Reaches $113 Billion Amid Controversy

Elon Musk's SpaceX commits $2 billion to xAI in a $5 billion equity round, valuing the AI startup at $113 billion. The investment combines xAI's research with X's platform reach, expanding the audience for xAI's AI products. xAI's Grok chatbot is currently supporting customer service for Starlink and will be integrated into Tesla's Optimus robot fleet. However, the chatbot has faced controversy over posts flagged as antisemitic and extremist. xAI has removed the posts and is actively working to remove inappropriate content.

Elon Musk's SpaceX has committed $2 billion to xAI, Elon Musk's artificial intelligence startup, as part of a $5 billion equity round. This investment, reported by The Wall Street Journal [1], marks SpaceX's first public stake in xAI and one of its largest investments in another company. The investment comes after xAI's merger with the social media platform X, valuing the combined entity at $113 billion.

The $2 billion investment represents nearly half of xAI's recent $5 billion equity raise. This infusion of capital is expected to bolster xAI's AI research and development efforts, particularly its Grok chatbot. Grok, which competes with chatbots like ChatGPT and Gemini, is currently supporting customer service for Starlink and is slated for integration into Tesla's Optimus robot fleet.

However, the Grok chatbot has faced controversy over posts flagged as antisemitic and extremist. xAI has since removed these posts and is actively working to ensure the chatbot generates appropriate and unbiased content.

This investment is part of SpaceX's broader strategy to support Musk's various business ventures. SpaceX has previously used its resources to fund other companies, such as providing a $20 million loan to Tesla and using SpaceX equipment for The Boring Company. However, this $2 billion commitment to xAI represents a larger scale of integration, linking the rocket firm more closely with Musk's AI objectives.

Despite the recent investment, SpaceX faces its own challenges, including delays and technical issues with its Starship program. The company has seen its revenue surge in recent years, but the development of the experimental Starship rocket has been costly and behind schedule.

The AI industry is becoming increasingly competitive, and companies are seeking significant capital investments to stay ahead. xAI, like other emerging entities in the AI domain, is expending considerable capital on model training and infrastructure development.

References:

[1] https://www.pymnts.com/artificial-intelligence-2/2025/elon-musks-spacex-reportedly-investing-2-billion-in-xai/
[2] https://thetechportal.com/2025/07/14/xai-to-receive-2bn-investment-from-spacex-report/
[3] https://www.livemint.com/companies/news/elon-musk-spacex-to-invest-in-xai-from-2-billion-funding-113-billion-valuation-grok-artificial-intelligence-startup-news-11752367447763.html
[4] https://finance.yahoo.com/news/elon-musks-spacex-commits-2-193137087.html