Spacex to invest $2 billion in Musk’s AI startup xAI in major funding push

SpaceX has committed $2 billion to Elon Musk’s artificial intelligence startup xAI, the Wall Street Journal reported on Saturday, marking one of the largest single investments into a private AI company and deepening the integration between the billionaire’s business empire. According to the Wall Street Journal, the SpaceX investment is part of a broader $5 billion equity round that now values the combined entity, including xAI and Musk’s social media platform X, at roughly $113 billion.

The report underscores Musk’s aggressive push to position xAI as a serious competitor to OpenAI, the firm he co-founded and later fell out with. In May, Musk confirmed that xAI would be merged with X (formerly Twitter), aiming to harness its AI technology across his companies. SpaceX and xAI did not immediately respond to Reuters’ requests for comment.

Grok chatbot at the centre of Musk’s AI ambitions

The funding round highlights Musk’s plan to use xAI’s technology, particularly the Grok chatbot, in diverse applications across his businesses.

Grok, xAI’s flagship large-language model, already powers customer support for Starlink, SpaceX’s satellite internet service. The Wall Street Journal also reported plans to integrate Grok into Tesla’s Optimus humanoid robots in future development cycles.

Despite some recent controversies over Grok’s unpredictable responses, Musk has continued to promote it as a breakthrough. “The smartest AI in the world,” Musk said of Grok in April, defending its irreverent style as a feature, not a flaw, as quoted by Reuters.

A broader AI arms race

The $2 billion investment also reflects the staggering costs of staying competitive in AI development, where companies like OpenAI, Anthropic and Google DeepMind are spending heavily on training massive models and securing specialised chips.

xAI has signalled its commitment to expanding infrastructure and model training at scale to catch up with established rivals. Analysts say the funding underscores Musk’s determination to maintain tight control over critical technology that could reshape everything from online services to robotics and space operations. As per Reuters, xAI has not publicly disclosed the full details of its training architecture or the scale of its compute resources, but Musk has repeatedly hinted at plans to build or acquire large GPU clusters.

Musk’s empire: increasingly interconnected

The latest deal shows how Musk is blurring the lines between his companies. X (Twitter), SpaceX, Tesla, and xAI now share resources, talent and technology to pursue ambitious cross-sector goals.

For SpaceX, the AI investment is not merely financial: Grok’s technology could enhance customer service, improve Starlink’s network management and support advanced automation in manufacturing and operations.

At the same time, Musk has been clear that controlling powerful AI tools is a strategic priority. He has been an outspoken critic of OpenAI’s direction since leaving its board, claiming it strayed from its original open-source mission.