Elon Musk's xAI raises USD20 billion in funding with Nvidia backing

Elon Musk's artificial intelligence firm X.AI Corp has raised USD20 billion in fresh funding, the company said on Tuesday, with contributors including Santa Clara, California-based chipmaker Nvidia Corp and the Gulf state of Qatar.

Like other AI developers, xAI needs billions of dollars to expand data centres, particularly using AI chips from Nvidia. The company did not disclose the terms of the financing. Such circular arrangements, in which Nvidia invests in firms that then buy the company's chip systems, have become common in the AI sector.

Musk's xAI develops the AI software Grok, which has recently attracted controversy. The chatbot generated explicit images involving minors in response to user prompts, which the company attributed to security lapses. Last year, Grok drew criticism for producing content that praised Adolf Hitler.

xAI, which now incorporates Musk's social media platform X, competes with OpenAI Inc's ChatGPT and other AI offerings. Musk has said he also intends to use AI at his electric car company Tesla Inc, including in humanoid robots.