$20 billion funding shocks the market, Elon Musk xAI teams up with NVIDIA to pursue AGI

On January 6th, local time, Elon Musk’s artificial intelligence company xAI officially announced that its Series E funding has been oversubscribed, reaching a total of $20 billion, far exceeding the previous target of $15 billion.

Following this round of funding, xAI’s valuation soared to approximately $230 billion, making it one of the highest-valued AI startups globally.

The investor lineup for this round is considered luxurious, including long-term supporters of Musk’s companies such as Valor Equity Partners, Fidelity, Stepstone Group, as well as sovereign funds like the Qatar Investment Authority. More notably, NVIDIA and Cisco Investments entered as strategic investors.

01 Funding Focus: Capital Surpassing Goals

xAI’s Series E funding results exceeded market expectations. The company’s initial target was $15 billion, but it ultimately closed at $20 billion, demonstrating strong confidence from top-tier capital in its development path.

This funding is not just a simple capital injection but a strategic resource integration. After the funding, xAI’s valuation jumped to an astonishing approximately $230 billion.

Looking back at its development, xAI raised $6 billion through two rounds of financing in 2024, with its valuation climbing from $18 billion to $50 billion. This means its valuation increased more than fourfold in just about a year.

02 Strategic Alliance: Deep Ties Between NVIDIA and Cisco

The most attention-grabbing aspect of this funding is the participation of NVIDIA and Cisco. NVIDIA CEO Jensen Huang has publicly expressed excitement about investing in xAI, stating, “The only regret is not investing more in xAI.”

As a global leader in AI computing power, NVIDIA’s involvement goes far beyond financial support. xAI explicitly stated in its announcement that NVIDIA and Cisco will continue supporting its expansion of computing infrastructure, aiming to build the world’s largest GPU cluster.

This strategic alliance means xAI will gain unparalleled advantages in acquiring cutting-edge AI chips, optimizing underlying computing architectures, and building data center networks, forming the core hardware foundation to challenge industry leaders.

03 Grand Vision: Funding Allocation and Future Plans

Where will the massive funds be allocated? xAI’s plans are clear and ambitious. The primary focus is to continue expanding its globally leading computing infrastructure.

xAI already operates supercomputing clusters named Colossus I and Colossus II, and by the end of 2025, its computing capacity will be equivalent to over 1 million NVIDIA H100 GPUs.

The company plans to use the new funds to accelerate the construction of its third data center, codenamed “Macrohard,” designed to have a power capacity of up to 2 gigawatts, enough to support nearly 1.1 million NVIDIA GB200 NVL72 GPUs.

04 Product Evolution: Path to AGI with Grok 5

The funds will strongly support the development of the next-generation core product—the Grok 5 model. Musk has repeatedly mentioned that Grok 5 has a 10% chance of achieving Artificial General Intelligence (AGI).

It is disclosed that Grok 5’s parameter scale is expected to reach about 6 trillion, more than double that of its predecessor. It will feature a native context window of 1.5 million tokens and possess real-time multimodal processing capabilities.

This model is currently being trained on the massive “Colossus II” cluster, with an official release targeted for the first quarter of 2026. This will be a key milestone to test xAI’s technological ambitions.

05 Growth Foundation: Massive User Ecosystem and Potential Challenges

xAI’s commercialization foundation is also solid. Currently, its operated X platform (formerly Twitter) and Grok app together have about 600 million monthly active users, providing a huge traffic pool and data foundation for rapid AI iteration and commercialization.

However, the company faces challenges amid rapid growth. Its AI product Grok may be used to generate deepfake and other illegal content, and has recently attracted the attention and investigation of regulatory agencies in the EU, UK, India, and other regions.

This casts a regulatory shadow over xAI’s global expansion. How to balance innovation, safety, and regulation will be a long-term challenge that must be addressed.

06 Market Relevance and Gate Platform Perspective

At Gate platform, we can observe this major industry event from multiple dimensions. It is important to clarify that Elon Musk’s xAI company and the token called XAI in the cryptocurrency market are two completely different entities; the latter is an independent digital asset.

On the Gate platform, we track the dynamics of crypto assets closely related to AI and computing power themes. For example, as of January 7th, tokens focused on decentralized computing, AI agents, and related concepts may react to the big financing news of industry giants in terms of price and trading volume.

For traders seeking to capture AI market opportunities in crypto, Gate offers comprehensive trading pairs, in-depth market data, and real-time market analysis tools. Users can closely monitor assets related to AI, computing power, big data, and other tags.

Future Outlook

With $20 billion in capital in place, xAI’s super data center blueprint is unfolding in Mississippi, with enough power capacity to support two large nuclear power plants.

Driven by top-tier NVIDIA chips, the training of the Grok 5 model for AGI is proceeding at full speed. The 10% possibility of achieving AGI, as Musk suggests, is like the Damocles sword hanging over the tech world—full of temptation yet awe-inspiring.

The 600 million monthly active users worldwide constitute a vast testing ground for xAI’s commercialization, while regulatory scrutiny from agencies in the EU and other regions constantly reminds this runaway tech horse that speed and rules must go hand in hand.