Elon Musk’s xAI Just Raised $20 Billion While Grok Churns Out Sexual Deepfakes

In a conveniently timed press release, Elon Musk’s artificial intelligence company xAI announced Tuesday that it has raised billions in new funding. The announcement comes amid backlash over the company’s Grok chatbot being used to alter users’ photos on X and generate sexually suggestive deepfakes.

Despite the backlash, xAI said it raised $20 billion in its most recent funding round, blowing past its original $15 billion target.

“This financing will accelerate our world-leading infrastructure buildout, enable the rapid development and deployment of transformative AI products reaching billions of users, and fuel groundbreaking research advancing xAI’s core mission: Understanding the Universe,” the company said in a press release.

The round included a long list of investors, such as Valor Equity Partners, Stepstone Group, Fidelity Management & Research Company, Qatar Investment Authority, MGX, and Baron Capital Group. Nvidia and Cisco Investments were also named as strategic investors, which the company said would continue to support xAI’s efforts to quickly scale its compute infrastructure.

In the press release, xAI also took the opportunity to highlight several milestones from the past year, including ending 2025 with more than one million H100 GPU equivalents powering its data centers. It also claimed it has roughly 600 million monthly active users across X and other Grok apps.

The company additionally bragged about Grok’s “lightning-fast” image and video generation modes, the very models that have come under scrutiny.

Since late last month, some X users have been prompting Grok to generate nonconsensual sexualized images from photos posted by other users on the site without their consent, including images involving minors. Contacted for comment, X responded in an email to Gizmodo with “Legacy Media Lies.”

But the scale of the problem on Grok appears to far exceed that of other AI tools.

Genevieve Oh, a social media and deepfake researcher, analyzed images posted by the Grok X account over a 24-hour period, from January 5 to January 6. She found that Grok generated about 6,700 sexually suggestive or nudifying images per hour, Bloomberg reports. By comparison, the next top five websites producing similar content averaged just 79 such images per hour over the same period.

This is far from the first time Grok has landed in hot water. Last year, an update meant to address what Musk described as a “center-left bias” instead led Grok to generate antisemitic propaganda, even referring to itself as “MechaHitler.” The company later said it had removed the offensive posts and banned Grok from generating hate speech on X.

Still, none of that appears to have slowed investor enthusiasm.

Baron Capital declined to comment when reached by Gizmodo. xAI and the remaining investors did not immediately respond to requests for comment.