According to a recent report by Bloomberg, Elon Musk’s xAI Holdings is currently engaged in discussions to secure $20 billion in new funding, which could potentially increase the company’s valuation to over $120 billion. The talks are reportedly in the early stages. If successful, this funding round would become the second-largest in history, surpassed only by OpenAI’s $40 billion raise last month.

The potential funding is expected to help mitigate xAI’s significant debt burden, with the company currently incurring substantial monthly servicing fees of $200 million, as reported by Bloomberg’s sources. By the end of last year, the company’s annual interest expenses had exceeded $1.3 billion.

A funding round of this magnitude would highlight the ongoing appeal of AI to investors and underscore Elon Musk’s emerging influence as a political power player within the White House under President Trump.

It is likely that Musk will seek investment from familiar backers who have consistently supported his ventures, including Tesla and SpaceX. These investors include Antonio Gracias of Valor Equity Partners and Luke Nosek of Gigafund. Notably, Gracias has taken on a role in Musk’s Department of Government Efficiency, serving as a key lieutenant.

xAI has not immediately responded to requests for comment on the potential funding.