SpaceX has invested $2 billion in Elon Musk’s artificial intelligence venture xAI, according to a report by The Wall Street Journal, marking one of the rocketmaker’s largest known investments into another company and a major move to accelerate xAI’s rivalry with OpenAI.
The investment represents nearly half of xAI’s $5 billion equity raise led by Morgan Stanley, highlighting Musk’s intent to closely align his business empire to fuel his AI ambitions. The merger earlier this year of xAI with social media platform X has already valued the combined entity at $113 billion, the report said.
SpaceX’s cash infusion will be used to bolster development of the Grok chatbot, xAI’s flagship AI model, which recently launched its fourth iteration. According to benchmarking firm Artificial Analysis, Grok 4 delivered strong performance scores, though its user traction still lags behind OpenAI’s ChatGPT.
In a statement cited by WSJ, xAI acknowledged recent concerns over controversial responses by Grok and said: “We deeply apologize for the horrific behavior that many experienced,” adding that remedial actions had been taken.
SpaceX’s partnership with xAI isn’t just financial. Grok is already powering customer support features for SpaceX’s Starlink satellite internet service, with investors telling WSJ that further integrations between the two Musk-led companies are expected.
Musk also announced plans to embed Grok in Tesla’s humanoid robot, Optimus, intensifying the convergence of AI across his ecosystem of businesses.
This investment by SpaceX adds to a pattern of cross-business support in Musk’s empire. As per WSJ, he previously borrowed $20 million from SpaceX to fund Tesla in its early days and tapped SpaceX equipment for his tunneling venture, The Boring Company. In 2022, he also borrowed $1 billion from SpaceX during his acquisition of Twitter, which he repaid soon after.
While SpaceX has rarely invested in external ventures—it acquired a satellite communications firm for $524 million in 2021—its $2 billion bet on xAI comes amid rising R&D costs. SpaceX is currently investing billions into its Starship rocket, which has faced multiple delays and test failures, including a major explosion during an engine test last month.
Despite this, SpaceX had more than $3 billion in cash on hand, as previously reported by WSJ, giving it the flexibility to support Musk’s AI ambitions without immediately jeopardizing its space operations.
xAI, meanwhile, is burning billions annually to train advanced AI models, mirroring the capital-intensive nature of rivals like Anthropic and OpenAI. In addition to the $5 billion equity round, xAI has raised another $5 billion in debt and is reportedly planning another funding round later this year, investors told The Wall Street Journal.