Morgan Stanley reported on Monday that Elon Musk’s company, Xai, has secured a substantial $10 billion in both debt and equity financing.
This sum includes $5 billion from secured notes and term loans, while the remaining $5 billion comes from strategic equity investments, according to the bank. Musk’s social media platform, which has been rebranded from Twitter, is part of this funding.
“This transaction showcases the backing from prominent global debt investors, highlighting confidence in Xai’s ambitions,” stated Morgan Stanley.
Xai aims to advance cutting-edge AI solutions, including what it claims is one of the largest data centers in the world, along with its flagship Grok platform.
The company did not provide immediate comments regarding this announcement.
This funding is crucial for Musk as he competes against companies like OpenAI, led by CEO Sam Altman, in the race to develop data centers capable of supporting sophisticated language learning models.
As of May, Musk’s Xai has already installed 200,000 Graphics Processing Units (GPUs) at its Colossus facility in Memphis, Tennessee. Musk mentioned plans to further acquire GPUs from Nvidia and AMD, with the intentions of building a one-million GPU center nearby.
In February, the company introduced its newest chatbot, Grok 3. While other platforms also offer AI bots, Musk has integrated this one into X to grow its user base.
Xai previously acquired X in a deal that valued it at $33 billion, notably lower than the $44 billion he spent on Twitter in 2022, while valuing Xai at $80 billion—though this latest funding may have altered that figure.
Last year, Xai managed to raise $6 billion at a valuation of $50 billion, according to reports.
In contrast, OpenAI recently completed a $40 billion funding round, raising its valuation to $300 billion, though its Human Funding Round has since bumped it up to $61.5 billion.
Musk has described Grok as a unique “wake-up” chatbot, but its launch hasn’t been without controversy. In one instance, it created confusion after referencing “white genocide” in South Africa while responding to an unrelated query, stating it seemed “instructed to deal with it.”
Xai continues to stand in competition with OpenAI; Musk co-founded OpenAI in 2015 alongside Altman but distanced himself from the organization by 2018.
Musk has expressed concerns that OpenAI has strayed from its original intent of being a nonprofit and shifted toward profit-making goals. Earlier this year, he made an unsolicited bid of $97.4 billion for OpenAI, which Altman swiftly declined.
