SpaceX has committed $2 billion to xAI, the AI startup founded by Elon Musk, according to the latest from WSJ. This indicates a further integration across Musk’s business ventures, as xAI continues its development to compete within the AI sector.
This funding marks Elon Musk’s SpaceX’s first publicly known investment in Elon Musk’s xAI and represents one of its largest capital deployments in an external entity. While SpaceX has previously made limited external investments, such as a $524 million acquisition of a satellite communications firm in 2021, the scale of the xAI funding is notable. Financial records indicate that SpaceX recently held over $3 billion in cash reserves, providing the liquidity for this commitment. Neither SpaceX nor xAI provided immediate comments regarding the investment.
The $2 billion investment follows xAI’s merger earlier this year with X (formerly Twitter). This combination brought together a relatively smaller AI research operation with a major digital platform. The merger valued the combined entity at $113 billion at that time.
xAI’s offering in the AI sector is its AI chatbot, Grok, which is the firm’s answer to the likes of ChatGPT, Gemini, and other chatbots. Future plans include integrating Grok’s capabilities into Tesla’s Optimus humanoid robots, though a timeline for this integration has not been disclosed. Musk has consistently used his various companies to support each other. This approach is evident in the xAI-X merger and in the planned integration of Grok into Tesla vehicles. Despite recent scrutiny regarding Grok’s occasional generation of objectionable content and apologies for past remarks, Musk has continued with these integration efforts. He recently referred to Grok 4, the latest version of the chatbot. Grok 4 includes access to real-time information from X and other platforms, alongside improved reasoning capabilities. Grok is far from perfect, though, as recent developments have showed, and the chatbot continues to be politically divisive.
This development comes at a time when SpaceX has its own space ambitions, even when its Starship program has encountered delays and several technical issues this year, including test failures and an engine test that resulted in an explosion. Despite these factors, SpaceX’s recent cash position supports its capacity for this investment. This allocation from SpaceX to xAI is not the first instance of Musk leveraging one of his companies to support another. Previous instances include a $20 million loan from SpaceX to aid Tesla and the use of SpaceX equipment for The Boring Company’s initial activities. More recently, Musk secured a $1 billion loan from SpaceX during his acquisition of Twitter, which was later repaid. The current $2 billion commitment to xAI, however, represents a larger scale of integration, linking the rocket firm more closely with Musk’s AI objectives. This comes as the AI industry intensifies its competition and demands for capital.
xAI, like other emerging entities in the AI domain, is expending considerable capital on model training and infrastructure development. The company’s recent fundraising efforts included securing $5 billion in debt financing in addition to the equity raise. And according to Musk, tesla – his EV firm – plans to poll his shareholders about whether they should drive investments in xAI as well. “It’s not up to me. If it was up to me, Tesla would have invested in xAI long ago. We will have a shareholder vote on the matter,” Musk announced in a post on X.
