--- category: Private Organization created: 2026-06-20 location: Bay Area, California, and Memphis, Tennessee summary: xAI is the artificial-intelligence company Elon Musk founded in 2023 after departing OpenAI, builder of the Grok model and the Colossus supercomputer, which merged with X in 2025, raised tens of billions of dollars, and whose founder sued OpenAI and Sam Altman over the abandonment of OpenAI's nonprofit mission. tags: - Organization - xAI - ElonMusk - OpenAI - ArtificialIntelligence - Grok - X updated: 2026-06-20 --- xAI is an artificial-intelligence company founded by [Elon Musk](/people/elon-musk/) in 2023, which builds the Grok family of large language models and the Colossus supercomputer in Memphis, Tennessee. Musk had cofounded [OpenAI](/organizations/openai/) in 2015 and left its board in 2018; he launched xAI as a direct competitor and, in 2024, sued OpenAI and its chief executive [Sam Altman](/people/sam-altman/) for abandoning the nonprofit mission the two had set out to build. In March 2025 xAI acquired the social platform X in an all-stock deal, merging Musk's AI lab with the network he had bought as Twitter in 2022.[^1][^2] ### Founding, Grok, and Colossus Musk incorporated xAI in March 2023 and announced it publicly on July 12, 2023, assembling a founding team of eleven researchers drawn from Google DeepMind, OpenAI, Microsoft Research, and Tesla, including the chief engineer Igor Babuschkin, a former DeepMind and OpenAI researcher, and Jimmy Ba, a coauthor of the widely cited Adam optimization paper. The company stated its aim as building AI to "understand the true nature of the universe." It released its first model, Grok, in November 2023 on X, positioning the chatbot as a "maximally truth-seeking" assistant with real-time access to posts on the platform, and shipped successive versions, reaching Grok 4 by 2025.[^1][^3] To train its models xAI built Colossus, a supercomputing cluster in Memphis that came online in September 2024 with roughly 100,000 Nvidia H100 graphics processors and expanded toward 200,000 by early 2025, drawing scrutiny over its power consumption and the gas turbines installed to feed it. The buildout placed xAI among the largest consumers of AI compute in the world and required capital on a scale that drove the company's repeated multibillion-dollar fundraising.[^3][^4] ### The Merger with X and the Fundraising On March 28, 2025 Musk announced that xAI had acquired X in an all-stock transaction, exchanging shares of both companies for shares of a new holding company, xAI Holdings Corp. Musk valued xAI at 80 billion dollars and X at 33 billion dollars, the latter figure derived from a 45-billion enterprise value less 12 billion in debt, and said the two companies' futures were now "intertwined." The merger folded the social platform, which Musk had bought as Twitter for 44 billion dollars in October 2022, into the AI company and gave xAI direct access to X's user base and data for training and distribution.[^2][^5] xAI raised capital aggressively to fund its compute. After earlier rounds, including a 6-billion-dollar raise that lifted its valuation to roughly 24 billion dollars, the company by late 2025 had taken in more than 20 billion dollars across primary funding alongside a multibillion-dollar debt facility arranged by Morgan Stanley. A December 2025 round drew participation from Nvidia, Valor Equity Partners, StepStone Group, Fidelity, the Qatar Investment Authority, MGX, and Baron Capital, with reporting putting the combined xAI-X entity's valuation well above 200 billion dollars.[^4][^6] ### Musk's Lawsuit Against OpenAI In February 2024 Musk sued OpenAI, Altman, and the cofounder Greg Brockman in California state court, alleging breach of contract and of the company's founding agreement, which he said committed OpenAI to developing artificial general intelligence as an open-source nonprofit "for the benefit of humanity" rather than for the profit of Microsoft. Musk, who had pledged early funding to OpenAI at its 2015 launch and served as cochair before leaving the board in 2018, framed the suit around the company's pivot to a capped-profit structure and its deepening Microsoft partnership. He withdrew the state suit in June 2024 and refiled in federal court.[^7][^8] The refiled federal complaint, later amended to name Microsoft as a defendant, alleged that OpenAI had become a "closed-source de facto subsidiary" of Microsoft and accused Altman of "rampant self-dealing," seeking damages and Altman's removal as chief executive and director; Musk amended the complaint so that any damages would flow to OpenAI's nonprofit rather than to himself. In May 2026 a nine-member advisory jury found that Musk had filed outside the statute of limitations, and Judge Yvonne Gonzalez Rogers dismissed the case.[^8] [^1]: "xAI," Britannica Money, on the 2023 founding, the July 12, 2023 announcement, the founding team from DeepMind, OpenAI, and Tesla, and the Grok model. https://www.britannica.com/money/xAI [^2]: "Elon Musk says xAI acquired X," *TechCrunch,* March 29, 2025, on the all-stock deal, the xAI Holdings Corp structure, and the 80-billion and 33-billion valuations. https://techcrunch.com/2025/03/29/elon-musk-says-xai-acquired-x/ [^3]: "All 11 xAI co-founders," The Next Web, on the eleven founding researchers including Igor Babuschkin and Jimmy Ba and their prior employers. https://thenextweb.com/news/xai-all-cofounders-departed-musk-spacex-rebuild [^4]: "xAI revenue, valuation and funding," Sacra, on the Colossus buildout, the more-than-20-billion total raised, and the Morgan Stanley debt facility. https://sacra.com/c/xai/ [^5]: "xAI Buys X: Why It Happened," FinTech Weekly, on the merger rationale and the Twitter acquisition history. https://www.fintechweekly.com/magazine/articles/xai-acquires-x-twitter-merger-elon-musk-ai [^6]: "Elon Musk's xAI raises $20 billion in Nvidia-backed funding round," *Gulf News,* 2025, on the December 2025 round and the Valor, StepStone, Fidelity, Qatar Investment Authority, MGX, and Baron Capital participation. https://gulfnews.com/business/markets/elon-musks-xai-raises-20-billion-in-nvidia-backed-funding-round-1.500400546 [^7]: "Elon Musk sues OpenAI and CEO Sam Altman over contract breach," *CNBC,* March 1, 2024, on the breach-of-contract claims, the founding agreement, and Musk's departure from the OpenAI board in 2018. https://www.cnbc.com/2024/03/01/elon-musk-sues-openai-and-ceo-sam-altman-over-contract-breach.html [^8]: "Jury dismisses all claims in Elon Musk's lawsuit against OpenAI CEO Sam Altman," *NPR,* May 18, 2026, on the refiled federal suit, the Microsoft defendant amendment, the "self-dealing" allegation, and the May 2026 dismissal. https://www.npr.org/2026/05/18/nx-s1-5822366/musk-altman-openai-jury-verdict-claims-dismissed