Musk Says $15 Billion xAI Raise Is “False” As Controversy Builds Around GPU Spending And Memphis Supercomputer Project

Elon Musk Denies $15 Billion xAI Funding Amid Complex Business Ties And Controversies

Whispers circulated this week that Elon Musk’s AI startup xAI had secured $15 billion in fresh funding, an addition to the $10 billion reportedly raised in September that valued the company at $200 billion.

The claim, attributed to anonymous sources “familiar with the matter,” was picked up by CNBC, which described it as one of the largest private tech fundraises in recent memory.

Musk, however, took to X to call the report “false,” offering no further detail.

Funding Claims Spark Debate Over xAI’s Strategy

According to CNBC, the alleged $15 billion would have primarily been spent on graphics processing units, essential for training large AI models.

Investor enthusiasm in AI remains high despite growing concerns of inflated valuations and heavy spending.

xAI, founded in July 2023 as an alternative to OpenAI’s ChatGPT, has been expanding its infrastructure aggressively, including purchasing land in Memphis, Tennessee, to construct its planned Colossus supercomputer.

Critics have raised concerns about environmental impacts, as these facilities rely on natural gas turbines, contributing to emissions in an area already facing air quality challenges.

Grok Controversies And Product Misfires

xAI’s products have not been free from controversy.

Its Grok chatbot, integrated into newer Tesla infotainment systems, has been criticised for inaccuracies and, in some instances, for spreading antisemitic and other harmful content.

Meanwhile, Grokipedia, an AI-powered encyclopaedia intended to rival Wikipedia, has drawn widespread backlash for misinformation.

Despite these issues, some observers note the platform’s attempt at a more neutral stance compared to traditional encyclopaedias.

Tesla And xAI Entanglements Deepen

The relationship between Musk’s AI firm and Tesla runs deeper than software integrations.

xAI has reportedly invested “tens of millions” in Tesla’s energy storage systems to support its data centre operations in Memphis, a strategy that has drawn scrutiny for its reliance on fossil fuels.

This entanglement extends to corporate governance: at Tesla’s recent shareholder meeting, investors approved Musk’s $1 trillion pay package contingent on ambitious performance targets over the next decade, but they rejected a measure allowing Tesla to invest in xAI.

Acquisitions And Corporate Complexity Add Pressure

xAI’s acquisition of X, formerly Twitter, in March for $33 billion in an all-stock deal, has further complicated Musk’s business landscape, intertwining his social media, automotive, and AI ventures.

The deal has intensified scrutiny over Musk’s multiple enterprises and their overlapping financial and operational ties.

Investor Confidence Meets Market Skepticism

While AI remains a magnet for investment, xAI’s high-profile expansions and product controversies have not eased scepticism.

The reported $15 billion raise, if true, would place xAI alongside major competitors such as OpenAI and Anthropic in the race for large language model supremacy.

Yet Musk’s denial and xAI’s automated response calling the report “Legacy Media ‍Lies” have left the market and the public questioning the true state of the company’s finances.

Memphis Data Centres Draw Environmental Criticism

Environmental groups have highlighted the risk posed by xAI’s Memphis facilities, which rely on carbon-emitting natural gas turbines.

Local researchers have voiced concerns about worsening air quality in the region, contrasting sharply with Musk’s previously marketed green initiatives.

Investor Questions Remain Unanswered

The combination of ambitious AI projects, controversial products, intertwined corporate ventures, and environmental scrutiny has left both investors and the public seeking clarity.

Despite Musk’s denial of the $15 billion funding, the company’s aggressive expansion and the ongoing integration of Tesla, xAI, and X continue to create a complex narrative that is far from resolved.