Elon Musk’s xAI eyes $20 billion raise at $120 billion valuation

xAI Holdings was formed in March 2025 through the merger of xAI and X (formerly Twitter), aiming to unify Elon Musk’s AI ambitions with the social platform’s vast user base and infrastructure

Tech mogul Elon Musk’s newly formed company, xAI Holdings, is reportedly in discussions with investors to raise around $20 billion in fresh capital, potentially pushing the company’s valuation beyond $120 billion, according to reports. If successful, this funding round would become one of the largest in history, second only to OpenAI’s $40 billion raise earlier in 2025.

xAI Holdings was established in March 2025 following the merger of xAI—developer of the AI chatbot Grok—and X, the social platform formerly known as Twitter. Musk, who purchased Twitter for $44 billion in 2022, transferred ownership of the platform to xAI earlier this year in a deal valued at approximately $33 billion. The merger was positioned as a strategic move to unify Musk’s AI ambitions with X’s expansive digital infrastructure and user base.

“This combination brings together xAI’s cutting-edge technology with X’s scale and global presence,” Musk stated at the time of the merger.

Musk aims to cut debt

Insiders, as per reports, suggest that a portion of the upcoming funding may be allocated to reduce the substantial debt Musk accumulated during the original Twitter buyout. While X’s financials have begun to stabilize—helped by improving ad revenues and renewed investor interest—the company continues to carry a heavy debt burden.

At the end of 2024, X was paying over $1.3 billion annually in interest, with a recent payment of $200 million made in March. This level of financial obligation has strained both the platform and the consortium of banks involved in financing the acquisition.

Reports citing sources indicate that the capital raise is still in preliminary stages, and the total amount could exceed $20 billion depending on investor appetite. Musk and his leadership team have been actively engaging potential backers, highlighting the long-term potential of combining generative AI capabilities with a high-traffic social media platform.

The funding is expected to fuel further AI development, platform innovation, and broader integration across services as xAI Holdings seeks to position itself as a formidable rival in both tech and media sectors.

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