According to a new Bloomberg report, citing people familiar with the matter, Elon Musk’s XAI Holdings has targeted a massive $20 billion funding round and is currently in talks with potential investors.
It remains to be seen if XAI could raise $20 billion from investors, but if successful, it could be marked as the second biggest startup funding round of all time. The first belonged to OpenAI earlier this year when the AI company successfully raised a whopping $40 billion from investors.
The funding could potentially catapult XAI’s valuation to over $120 billion, a staggering leap for the startup. While XAI has not yet responded to the request for comment, one of the sources hinted that the funding amount could exceed $20 billion, as the exact amount and terms are yet to be determined.
XAI Holdings is a new initiative by Elon Musk that consists of Musk’s AI venture, xAI, and X, a social platform formerly known as Twitter. In March, Elon Musk confirmed that XAI acquired X in an all-stock transaction. The deal valued xAI at $80 billion and X at $33 billion, including $12 billion in debt. xAI also acquired generative AI video startup Hotshot in March.
“xAI and X’s futures are intertwined. Today, we officially take the step to combine the data, models, compute, distribution and talent. This combination will unlock immense potential by blending xAI’s advanced AI capability and expertise with X’s massive reach,” Musk said.
Elon Musk acquired then-Twitter in 2022 for $44 billion, and a part of it was raised from individual investors and investment banks. As the report reads, the latest funding could be used for repaying some of Musk’s debt, which he took for transitioning Twitter into a private company.
Bloomberg previously reported that X has paid about $200 million in debt-servicing costs related to its buyout. Also, by the end of 2024, the firm’s annual interest expense was more than $1.3 billion.
Meanwhile, some of the funding might also be used to develop the Colossus 2 Supercomputer. The giant AI supercomputer is expected to host 1 million NVIDIA GPUs, worth about $35 to $40 billion.