SpaceX Invests $2 Billion In Elon Musk’s AI Company xAI To Challenge OpenAI And Google

According to a report by The Wall Street Journal, SpaceX will now invest in Elon Musk’s artificial intelligence startup, xAI. The investment is estimated to be $2 billion, nearly half of the company’s $5 billion equity raise. This is considered to be the largest investment by SpaceX outside its core business operations, and the first public funding for xAI. After this investment,

Musk’s AI startup was valued at $113 billion

In March 2025, Musk’s xAI merged with the social media platform X (formerly known as Twitter). The combined valuation of both companies is now $113 billion.

Morgan Stanley, an investment firm, managed the equity round and announced it in June 2025. However, in response to media queries, neither SpaceX nor xAI has issued any formal statements.

Growing Synergy Between Musk Ventures, xAI and SpaceX

This investment indicates Musk’s deepening interest in the intersection of space and artificial intelligence. Grok, xAI’s AI assistant, is presently supporting Starlink customer service. It is now expected to be merged with Tesla’s humanoid robot, Optimus.

This investment strengthens Musk’s positioning in the competitive AI sector, where OpenAI and Google dominate the market. Musk’s team has also indicated further cross-business partnerships between SpaceX and xAI.

Financial Risks Amid Broader Expansion of Musk’s Ventures

SpaceX holds over $3 billion in cash. The company continues to fund major spacecraft projects, including the Starship rocket program. The program has faced technical delays, however. This business decision to allocate $2 billion to xAI echoes a broader strategy but presents some financial uncertainty and risks.

Musk has leveraged his ventures in recent years, using SpaceX resources to fund Tesla, Twitter, and The Boring Company.

Also Read: Elon Musk’s xAI Drops Grok 4: Calls It ‘Better-Than-PhD’ But Can It Outsmart OpenAI?