Saudi Arabian artificial intelligence company Humain announced on February 18 that it invested $3 billion in Elon Musk's xAI as part of the startup's $20 billion Series E funding round, completing the transaction just before xAI's acquisition by SpaceX and positioning the kingdom as a significant minority shareholder in the combined $1.25 trillion entity as Saudi Arabia accelerates its ambition to become a global AI powerhouse.
The investment made Humain a "significant minority shareholder" in xAI, with holdings subsequently converted into SpaceX shares representing approximately 0.24% ownership of the merged company according to Bloomberg estimates. The timing could produce substantial financial returns for the Saudi firm as Musk is reportedly planning an initial public offering of the combined SpaceX-xAI entity later in 2026.
Deepening Strategic Alignment Between Musk and Saudi Arabia
The deal strengthens the relationship between the world's richest man and the kingdom, which has made AI a central pillar of its efforts to diversify the economy away from oil dependence. Humain was formed in 2025 with backing from Saudi Arabia's trillion-dollar sovereign wealth fund, the Public Investment Fund, and Crown Prince Mohammed bin Salman serves as the company's chairman.
Humain CEO Tareq Amin described the investment as demonstrating the company's "conviction in transformational AI" and its ability to deploy capital behind opportunities "where long-term vision, technical excellence, and execution converge." The transaction occurred at what Humain characterized as a "highly compelling inflection point" for xAI preceding its acquisition by SpaceX in early February.
The $3 billion commitment builds on a partnership announced in November 2025 at the U.S.-Saudi Investment Forum, where Humain and xAI pledged to jointly develop more than 500 megawatts of next-generation AI data center and compute infrastructure in Saudi Arabia and to deploy xAI's Grok models across the kingdom. Together, these initiatives extend Humain's role from strategic partner to leading global shareholder in xAI.
Regional AI Competition With UAE Intensifies
The investment reflects intensifying competition between Gulf states for AI dominance, with Saudi Arabia and the United Arab Emirates pursuing divergent partnership strategies. While Saudi Arabia has backed xAI and Musk's broader ecosystem, the UAE has struck major deals with OpenAI including a massive data center complex under development in Abu Dhabi.
Across the Gulf region, sovereign wealth funds in Saudi Arabia, Qatar, Kuwait, and the UAE collectively control more than $4 trillion in assets and are increasingly channeling capital into artificial intelligence infrastructure, compute capacity, and strategic partnerships with Western AI companies. The funds view AI as critical to economic diversification strategies that reduce dependence on hydrocarbon revenues.
Access to U.S. Government Contractor Raises Strategic Questions
The deal gives Saudi Arabia a stake in a key American government contractor, as xAI announced contracts with the Pentagon and other U.S. government entities starting in mid-2025. SpaceX maintains extensive relationships with NASA, the Department of Defense, and intelligence agencies, making the Saudi investment politically sensitive given ongoing debates about foreign influence in critical technology infrastructure.
xAI's largest customers have been Musk's own companies including SpaceX and Tesla, though the startup has expanded its customer base to include a deal with El Salvador to roll out Grok models in the country's educational system. The company competes directly with OpenAI, Google, and Anthropic in developing frontier AI models and applications.
Humain's Broader Investment Strategy
Beyond xAI, Humain has pursued an aggressive expansion strategy focused on compute capacity, data centers, and AI partnerships. The company previously invested in AI video-generation startup Luma AI and formed a joint venture with chipmaker Advanced Micro Devices and Cisco Systems to build data center capacity in Saudi Arabia.
For Humain, the xAI investment represents one of the largest single-ticket deployments in the company's portfolio and reflects confidence that Musk's combined SpaceX-xAI entity will deliver substantial returns. The potential IPO later in 2026 could provide liquidity and validate the investment thesis considerably faster than typical venture capital timelines.
The $3 billion commitment also demonstrates Saudi Arabia's willingness to deploy sovereign capital at scale to secure strategic positioning in AI infrastructure and technology platforms, following a pattern established with earlier investments in firms like Uber, SoftBank's Vision Fund, and Lucid Motors.
