xAI was founded on March 9, 2023, by Musk.[10][11] For Chief Engineer, he recruited Igor Babuschkin, formerly associated withGoogle's DeepMind unit.[12] Musk officially announced the formation of xAI on July 12, 2023.[13]
As of July 2023, xAI was headquartered in theSan Francisco Bay Area.[14] It was initially incorporated inNevada as apublic-benefit corporation with the stated general purpose of "creat[ing] a material positive impact on society and the environment".[15] By May 2024, it had dropped the public-benefit status.[16] The original statedgoal of the company was "to understand the true nature of the universe".[17]
As of August 2024[update], Musk was diverting a large number ofNvidia chips that had been ordered byTesla, Inc. to X and xAI.[26] On December 23, 2024, xAI raised an additional $6 billion in aprivate funding round supported byFidelity,BlackRock,Sequoia Capital, among others, making its total funding to date over $12 billion.[27] On February 10, 2025, xAI and other investors made an offer to acquireOpenAI for $97.4 billion.[28] On March 17, 2025, xAI acquired Hotshot, astartup working onAI-powered video generation tools.[29] On March 28, 2025, Musk announced that xAI acquired sister companyX Corp., the developer of social media platformX (formerly known as Twitter), which was previously acquired by Musk in October 2022. The deal, an all-stock transaction, valued X at $33 billion, with a full valuation of $45 billion when factoring in $12 billion in debt. Meanwhile, xAI itself was valued at $80 billion. Both companies were combined into a single entity called X.AI Holdings Corp.[30][31][32]
On July 1, 2025,Morgan Stanley announced that they had raised $5 billion in debt for xAI and that xAI had separately raised $5 billion in equity. The debt consists of secured notes and term loans. Morgan Stanley took no stake in the debt.[33][34]SpaceX, another Musk venture, was involved in the equity raise, agreeing to invest $2 billion in xAI.[35] On July 14, xAI announced "Grok for Government" and theUnited States Department of Defense announced that xAI had received a $200 million contract for AI in the military, along withAnthropic,Google, and OpenAI.[36] On September 12, xAI laid off 500 data annotation workers. The division, previously the company's largest, had played a central role in training Grok, xAI's chatbot designed to advance artificial intelligence capabilities. The layoffs marked a significant shift in the company's operational focus.[37][38][39]
On November 26, 2025, Elon Musk announced his plans to build a solar farm nearColossus with an estimated output of 30 megawatts of electricity, which is 10% of the data center's estimated power use. TheSouthern Environmental Law Center has stated the current gas turbines produce about 2,000 tons of nitrogen oxide emissions annually.[40]
In June 2024, theGreater Memphis Chamber announced xAI was planning on buildingColossus, the world's largest supercomputer, inMemphis, Tennessee.[41] After a 122-day construction, the supercomputer went fully operational in December 2024. Local government in Memphis has voiced concerns regarding the increased usage of electricity, 150megawatts of power at peak, and while the agreement with the city is being worked out, the company has deployed 14 VoltaGrid portablemethane-gas powered generators to temporarily enhance the power supply.[42]
Environmental advocates said that the gas-burning turbines emit large quantities of gases causing air pollution, and that xAI has been operating the turbines illegally without the necessary permits.[43][44]The New Yorker reported on May 6, 2025, that thermal-imaging equipment used by volunteers flying over the site showed at least 33 generators giving off heat, indicating that they were all running. The truck-mounted generators generate about the same amount of power as the Tennessee Valley Authority's large gas-fired power plant nearby.[45] The Shelby County Health Department granted xAI an air permit for the project in July 2025.[46]
xAI has continually expanded its infrastructure, with the purchase of a third building on December 30, 2025 to boost its training capacity to nearly 2 gigawatts of compute power. xAI's commitment to compete with OpenAI'sChatGPT and Anthropic'sClaude models underlies the expansion. Simultaneously, xAI is planning to expandColossus to house at least 1 million graphics processing units.[47]
On February 2, 2026,SpaceX acquired xAI in an all-stock transaction that structured xAI as a wholly owned subsidiary of SpaceX.[9][48] The acquisition valued SpaceX at $1 trillion and xAI at $250 billion, for a combined total of $1.25 trillion.[49]
On February 11, 2026, xAI was restructured following the SpaceX acquisition, leading to some layoffs, the restructure reorganises xAI into four primary development teams, one for the Grok app and others for its other features such as Grok Imagine. Grokipedia, X and API features would fall under more minor teams.[50]
According to Musk in July 2023, apolitically correct AI would be "incredibly dangerous" and misleading, citing as an example the fictionalHAL 9000 from the 1968 film2001: A Space Odyssey. Musk instead said that xAI would be "maximally truth-seeking". Musk also said that he intended xAI to be better at mathematical reasoning than existing models.[51] On November 4, 2023, xAI unveiledGrok, an AIchatbot that is integrated withX. xAI stated that when the bot is out ofbeta, it will only be available to X'sPremium+ subscribers.[52][53]
In March 2024, Grok was made available to all X Premium subscribers; it was previously available only to Premium+ subscribers.[54][55] On March 17, 2024, xAI released Grok-1 asopen source.[56][57] On March 29, 2024, Grok-1.5 was announced, with "improved reasoning capabilities" and a context length of 128,000 tokens.[58] On April 12, 2024, Grok-1.5 Vision (Grok-1.5V) was announced.[59][non-primary source needed] On August 14, 2024, Grok-2 was made available to X Premium subscribers.[60] It is the first Grok model with image generation capabilities.[61]
On October 21, 2024, xAI released anapplications programming interface (API).[62] On December 9, 2024, xAI released atext-to-image model namedAurora.[63] On February 17, 2025, xAI released Grok-3, which includes areflection feature. xAI also introduced a websearch function called DeepSearch.[64] In March 2025, xAI added an image editing feature to Grok, enabling users to upload a photo, describe the desired changes, and receive a modified version.[65] Alongside this, xAI released DeeperSearch, an enhanced version of DeepSearch.[66] On July 9, 2025, xAI unveiled Grok-4. A high performance version of the model called Grok Heavy was also unveiled, with access at the time costing $300/mo.[67]
On October 27, 2025, xAI launchedGrokipedia, an AI-powered online encyclopedia and alternative toWikipedia, developed by the company and powered by Grok.[68] Also in October, Musk announced that xAI had established a dedicated game studio to develop AI-driven video games, with plans to release a great AI-generated game before the end of 2026.[69][70]
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