Elon Musk’s xAI Secures $10 Billion in Debt and Equity Funding to Boost AI Expansion

Elon Musk’s artificial intelligence startup, xAI, has successfully raised $5 billion through debt financing alongside a separate $5 billion strategic equity investment, according to Morgan Stanley. The funds aim to accelerate xAI’s development of AI infrastructure, including data centers and its flagship platform, Grok, as competition heats up in the AI sector.

The $5 billion debt raise consists of secured notes and term loans and was oversubscribed, attracting prominent global investors. This significant financial backing underscores strong confidence in xAI’s ambitious plans despite earlier reports of tepid investor demand.

In addition to the debt financing, xAI has been in talks to secure approximately $20 billion in further equity funding, potentially valuing the company between $120 billion and $200 billion. These negotiations reflect the high expectations placed on the company’s future growth and technological breakthroughs.

Proceeds from these funding rounds will support ongoing AI research, infrastructure expansion, and product development efforts. However, xAI did not provide immediate comments on the funding news outside regular business hours.

As the AI industry becomes increasingly competitive, this substantial capital injection positions xAI to scale its operations rapidly, aiming to challenge major players and establish itself as a key innovator in the sector.

Source: Reuters