The firm, whose flagship product is the Grok chatbot, garnered support from US venture capitalists, chipmakers NVIDIA and AMD, and investment funds from Saudi Arabia and Qatar among others.
Musk has repeatedly warned that AI poses a risk to human civilisation, but he is pushing hard for a bigger slice of investment in the sector and xAI already raised $6 billion in May.
The company is now one of the world's most valuable startups with an estimated $50 billion valuation, though still dwarfed by chief competitor OpenAI's estimated $157 billion.
Despite the sky-high estimates, critics have pointed out that AI firms are burning through cash and still have no clear path to profitability.
Announcing the funding on Monday, xAI said it would use the cash injection to "ship groundbreaking products that will be used by billions of people".
It would also "accelerate the research and development of future technologies enabling the company's mission to understand the true nature of the universe".
Musk, who also acts as boss of SpaceX and Tesla and is a chief backer of US president-elect Donald Trump, wrote on his X account that "a lot of compute is needed" to power AI products.
He launched the company in July 2023 shortly after he signed an open letter calling for a pause in the development of powerful AI models.
Musk is currently taking legal action against ChatGPT-maker OpenAI, which he co-founded as a non-profit in 2015 before leaving in 2018, alleging that its conversion to a for-profit company breaks legally binding commitments.
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