Elon Musk's other companies could soon pour billions into his AI startup

SpaceX, the rocket company Musk founded and controls, is reportedly investing $2 billion into xAI, his artificial intelligence startup best known for building Grok, the erratic (and controversial) chatbot now embedded in X $TWTR, formerly Twitter. The deal, first reported by the Wall Street Journal, represents nearly half of a $5 billion equity round backed by Morgan Stanley $MS that values xAI at approximately $113 billion.

The move is the latest example of Musk tapping one company in his sprawling empire to bolster another — a playbook he’s returned to repeatedly across his ventures. In Tesla $TSLA’s early days, he borrowed millions from SpaceX to keep the company afloat. When he took over what was then Twitter in 2022, he deployed staff from Tesla, SpaceX, and the Boring Company to help with the transition. And more recently, Tesla revealed that xAI had purchased $191 million worth of its Megapack energy storage systems last year.

Now, Musk says Tesla could be the next to invest directly in xAI. But this time, he insists the decision won’t be his alone. “It’s not up to me,” Musk wrote on X on Sunday in response to a user who suggested Tesla should be allowed to buy into xAI. “If it was up to me, Tesla would have invested in xAI long ago. We will have a shareholder vote on the matter.”

The question of how Musk’s businesses are interconnected — and how much they financially benefit one another — has taken on renewed significance as xAI rapidly expands. Musk launched the startup in 2023 as a competitor to OpenAI, Google $GOOGL DeepMind, and Anthropic. In March, he merged xAI with X in a deal that reportedly valued the AI company at $80 billion and the social media platform at $33 billion. Since then, Musk has been integrating xAI’s Grok chatbot across his businesses. The tool now powers customer service for Starlink, SpaceX’s satellite internet division, and Musk said last week that Grok would soon be in Tesla vehicles. The CEO has also said that he plans to incorporate Grok into Tesla’s humanoid robot prototype, Optimus.

That expansion has come at a steep cost. According to Bloomberg, xAI is burning through roughly $1 billion a month as it races to build and train its large language models — and keep up with competitors. The company has already raised over $12 billion through a mix of debt and equity and, per the Financial Times, is seeking a funding round that could value it as high as $200 billion. (Musk called this “false” and said xAI “has plenty of capital.)

Grok’s performance, however, has drawn mixed reviews. While third-party AI assessment firm Artificial Analysis called the latest version, Grok 4, “higher quality compared to average,” the chatbot has recently come under fire for various reasons, including for generating antisemitic content on X. xAI issued a public apology on Saturday, saying it had taken corrective action on the “horrific behavior.” 

SpaceX, meanwhile, rarely backs outside ventures. Musk said recently the firm would hit $15.5 billion in revenue this year, thanks to both launch services and its satellite internet business, and it reportedly had over $3 billion in cash on hand earlier this year. But SpaceX has its own capital needs: It’s currently spending heavily on Starship, the rocket system the company hopes will power future missions to the Moon and Mars. The rocket has suffered multiple delays and catastrophic failures in testing this year, and SpaceX also is facing a more competitive satellite market as rival networks ramp up — and as Musk may no longer get sweetheart deals from the Trump administration amid the CEO’s fallout with the president.

Notably, though, this latest cross-business investment doesn’t seem to be driven by desperation. Neither xAI nor SpaceX appears to be strapped for cash or lacking investor interest.

While Musk’s constellation of companies has long overlapped operationally, this latest round of cross-investment could raise questions about governance. Is this legal? Yes; related‑party investments are permitted. Loans and transactions between related companies aren’t inherently unusual — but they often trigger scrutiny, particularly when they involve self-dealing or limited transparency.

And with Musk, that scrutiny tends to collide with complexity. He runs and effectively controls three of the most valuable private and public companies on the planet: Tesla, with a market cap just under $1 trillion; SpaceX, last valued at roughly $400 billion; and X/xAI, now pegged at $113 billion post-merger. That level of personal control is rare. And so is the scale of the capital in motion — and the fact that there’s so little precedent to compare it with. For investors and analysts, assessing the risks of Musk’s overlapping empire and his resource-shuffling patterns means operating in largely uncharted territory.

Musk has long dismissed concerns about how closely his companies are intertwined, often framing the overlap as a strategic advantage rather than a governance risk. But Tesla’s board has previously faced legal challenges over those blurred lines — including a 2016 shareholder lawsuit that alleged that Tesla overpaid to acquire SolarCity, a company of which Musk was the chairman and largest shareholder. Musk ultimately won the case, though it renewed scrutiny of his management style.

Now, with $2 billion flowing from SpaceX to xAI and with Tesla potentially next to invest, the spotlight is back on how — or whether — Musk separates his businesses. Whether investors see these moves as synergy or a red flag may come down to where Musk and his companies draw the lines — if they draw them at all.