xAI completed an investment round that raised $20 billion. This was significantly higher than the originally targeted amount of $15 billion.
The capital will be used to expand the company’s AI infrastructure further. xAI trains its Grok language models on its own supercomputer called Colossus, which was commissioned in September 2024 with an initial 100,000 GPUs. The system now consists of more than one million H100 GPU equivalents, the company announced.
The expansion of Colossus is accompanied by physical scaling. Last week, Elon Musk (photo) announced that xAI had purchased a new data center to scale up its computing power further. It is reportedly a former warehouse outside Memphis. According to SiliconANGLE, the data center is located near a power plant that xAI is building to meet increasing electricity demand.
That power demand is considerable. Musk, owner of xAI, indicated that Colossus’ energy consumption could reach 2 gigawatts after the planned upgrades. That is comparable to the electricity consumption of more than a million households. In that context, Nvidia’s involvement is also relevant. Musk recently praised Nvidia’s new Rubin GPU, sparking speculation about its possible use in Colossus. Rubin could perform inference workloads at about one-tenth of the cost per token of Nvidia’s Blackwell architecture.
Investments in product development
In addition to infrastructure investments, xAI is using the capital raised for product development. The company is targeting both consumers and business users. xAI recently introduced an enterprise version of Grok with Google Drive integration, allowing employees to search for files via the chatbot. This Grok Enterprise variant also includes access management features, proprietary encryption keys, and additional security options.
In the coming months, xAI plans to add more integrations with external services, collaboration functionality, and support for building custom AI agents. These enhancements will be rolled out alongside Grok 5, the company’s next major language model. xAI has confirmed that training for this model has already begun, but has not yet shared any details about the launch date or new capabilities.
The investment round included Valor Equity Partners, Stepstone Group, Fidelity Management & Research Company, Qatar Investment Authority, MGX, and Baron Capital Group. Nvidia and Cisco Investments also invested as strategic partners. CNBC previously reported that xAI would be valued at approximately $230 billion in this round.