Elon Musk’s XAI Holdings is in talks with investors to raise roughly $20 billion in funding for his newly combined artificial intelligence startup and social media business, according to people familiar with the matter. 

If completed, the prospective deal would be the second-largest startup funding round of all time, according to data provider PitchBook, trailing only OpenAI’s $40 billion financing earlier this year. The transaction would value the company at more than $120 billion, said one of the people, all of whom asked not to be identified because the information is private. 

XAI didn’t immediately respond to requests for comment.

Announced in March, XAI Holdings was created from the combination of X, formerly Twitter, and Musk’s AI venture, xAI. The new funding could be used to pay down some of the debt that Musk took on when he converted Twitter into a private company, later renaming it X, one person said. 

That debt has been weighing on X, Bloomberg previously reported. In March alone, X paid about $200 million in debt-servicing costs related to its buyout, according to people briefed on the matter. The firm’s annual interest expense by the end of 2024 was more than $1.3 billion.

Since the merger, Musk and associates have been sounding out investors on their appetite to put more money into the combined entity, some of the people said. The talks for a prospective round are in the early stages, and the company aims to raise the funds over the next few months.

The amount in the round could rise higher than $20 billion, one of the people said. The total hasn’t yet been decided, and terms could change, the people said.

The size of the new funding round underscores both investors’ enthusiasm for AI companies, and Musk’s standing as a business titan and political power player. Musk, a key ally of President Donald Trump, is expected to soon leave Washington, but has made sweeping changes in government since Trump’s election and installed key allies in powerful positions there. 

While the fortunes of Tesla Inc. — Musk’s publicly traded business — have faltered, the valuations at his private firms have continued to climb. For example, Musk’s rocket company, SpaceX, became the most valuable startup in history after a private transaction last year valued the business at $350 billion. 

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Published on April 26, 2025