XAI Holdings, the AI and social media conglomerate formed by Elon Musk, is in negotiations with undisclosed investors to raise approximately $20bn in a new funding round, reports Bloomberg citing sources.

If successful, this would be the second-largest startup funding round on record, following OpenAI’s $40n earlier in 2025.

The proposed deal would place XAI Holdings’ valuation at more than $120bn, sources familiar with the development told the publication.

The funding round discussions are still in preliminary stages, with the aim to raise the capital during the coming months.

While the target is set at $20bn, the final amount could potentially increase, and the terms are subject to change as negotiations progress, the report says.

XAI Holdings was launched in March 2025 through the merger of Musk’s AI venture, xAI, and X, the platform formerly known as Twitter.

According to one source, the raised funds could be used to reduce some of the debt Musk accumulated during this acquisition and privatisation of Twitter, now rebranded as X.

In March 2025, X reportedly paid around $200m in debt-servicing costs linked to its buyout.

By the end of 2024, the company’s annual interest expenses had exceeded $1.3bn.

Musk and his team have been exploring investor interest in the combined entity since the merger.

In February 2025, Bloomberg reported that xAI was seeking a $10bn funding round, valuing the firm at approximately $75bn.

Existing investors such as Sequoia Capital, Andreessen Horowitz, and Valor Equity Partners were in talks to participate.