xAI raises $20bn in Series E funding amid Grok controversy

xAI was successful in raising US$20 billion in its latest funding round on Tuesday.

The AI company said the Series E funding round surpassed its $15 billion target, highlighting Grok’s image-generation abilities in particular as an important asset.

In its press release this week, xAI said: “Our frontier language models are built on the best-in-class training infrastructure powered by Colossus. xAI has pushed reinforcement learning training to unprecedented levels, refining Grok’s intelligence, reasoning and agency using pretraining-scale compute.

“Grok 5 is currently in training and we are focused on launching innovative new consumer and enterprise products that harness the power of Grok, Colossus and X to transform how we live, work and play.”

xAI has said this level of financing will support its infrastructure buildout and enable fast development and deployment of AI products that can reach billions of users. This funding round featured industry-leading investors, including Nvidia, Fidelity Management, Resource Company, Valor Equity Partners and Qatar’s sovereign wealth fund.

Founded by Elon Musk, xAI has sought investment for a number of months as it seeks to increase the capabilities of its AI models. The company will likely continue looking to build out large data centres in Memphis, Tennessee, to – as it noted in its press release – work towards its core mission of “understanding the universe”.

The news comes as the AI company faces significant criticism over its chatbot Grok generating indecent and abusive images. Grok is a free AI assistant built to rival OpenAI’s ChatGPT. It is often used to have conversations with, generate images and brainstorm ideas.

Addressing the situation via a statement, UK technology minister Liz Kendall said the content was “appalling and unacceptable,” calling for xAI to deal with it “urgently”. UK regulator Ofcom has reportedly contacted xAI about the matter.

This is not the first time xAI has attracted controversy. Last year, Capacity reported on aerial footage suggesting that the company’s Colossus data centre in South Memphis had nearly doubled its number of gas turbines – exceeding what the company had applied for in permits.

The Guardian also reported on Tuesday that xAI made a similar funding announcement in July 2025 during another controversy that Grok had been posting antisemitic content and pro-Nazi ideology. The company had secured a contract with the US Pentagon worth roughly $200 million.

CNN reported this morning that xAI founder Elon Musk and xAI said that they are taking action “against illegal content on X, including Child Sexual Abuse Material (CSAM), by removing it, permanently suspending accounts and working with local governments and law enforcement as necessary.”

However, CNN noted that Grok is still responding to illegal user requests.

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