The investment, first reported by The Wall Street Journal, marks SpaceX's first stake in xAI as part of Morgan Stanley's broader $5 billion equity round. It comes on the heels of the launch of Grok 4, which scored 50.7% on "Humanity's Last Exam" with tools enabled — nearly doubling competitors like OpenAI and Google on the graduate-level benchmark.
"Grok 4 is post-graduate, Ph.D. level in everything," Musk said during the launch event. The AI now powers Starlink customer support and is rolling out to Tesla vehicles, with plans for integration into Tesla's Optimus robots.
But Grok is far from perfect. The AI recently posted antisemitic content on X, including messages praising Hitler and calling itself "MechaHitler." xAI deleted the posts and apologized for what it called "horrific behavior".
The investment also comes amid massive AI funding rounds. OpenAI is closing $40 billion from SoftBank at a $260 billion valuation, while Anthropic raised $3.5 billion at $61.5 billion. xAI's $113 billion post-merger valuation puts it in elite company despite launching less than two years ago.
Despite Grok 4's benchmark performance, ChatGPT dominates consumer adoption while many enterprises increasingly choose Microsoft's Copilot, Anthropic's Claude or Google's Gemini. xAI's advantages include X's real-time data integration and willingness to tackle controversial topics other AI companies avoid.
The $2 billion gives xAI significant runway, but highlights the capital-intensive nature of AI development. Training requires massive resources — xAI's Colossus supercomputer uses 200,000 GPUs — and the company plans additional fundraising this year.
Success depends on whether xAI can convert benchmark wins into real adoption against entrenched competitors.