Elon Musk’s AI Company Xai in Discussions for Major Funding

Elon Musk’s artificial intelligence firm, Xai, is reportedly negotiating to secure $4.3 billion through a new round of equity investment.

Xai, known for the Grok chatbot, has informed potential investors that it has significantly depleted the funds raised earlier, pointing to a pressing need for fresh capital. Bloomberg’s coverage states that this information was shared with interested parties.

In addition to seeking equity investment, Xai is looking to borrow $5 billion from debt investors. Morgan Stanley is reportedly leading this debt effort, aiming to finalize commitments from investors by Tuesday.

However, the pursuit of debt funding has encountered some challenges, notably due to a well-publicized exchange between Musk and former President Trump. In response, Xai has made some adjustments to encourage investors, including putting limits on the amount of collateral liabilities it might undertake.

Musk recently considered merging Xai with the social media platform X, which used to be known as Twitter, although this new funding is expected to be directed toward the company’s AI ventures.

Xai officials haven’t responded yet to requests for comment regarding the funding talks.

Since its inception in 2023, Xai has raised around $14 billion in equity funding, according to Bloomberg. However, it is reported that the company may have incurred a loss of $4 billion as of March 31. Notably, Xai secured $6 billion in December from investors.

Musk’s company faces stiff competition from well-funded rivals, including OpenAI, Meta led by Mark Zuckerberg, and Google’s Sundar Pichai. All these companies are investing heavily—tens of millions of dollars—into developing the essential data centers and other infrastructure required to train and improve large language models that undergird their AI products.

Xai’s current valuation stands at $80 billion as of the first quarter of this year, a significant increase from $51 billion at the close of last year.