Artificial intelligence company xAI, founded by tech entrepreneur Elon Musk, has secured a total of $10 billion in new funding, a move that significantly bolsters its ambition to lead the next wave of AI innovation.
The funding includes $5 billion in secured notes and term loans arranged by Morgan Stanley and an additional $5 billion in strategic equity investment obtained separately.
Morgan Stanley, which announced the deal, said the debt offering was oversubscribed, drawing interest from a consortium of prominent global debt investors.
The firm described the successful transaction as a vote of confidence in xAI’s long-term mission to “accelerate scientific discovery and advance humanity’s collective understanding of the universe.”
A strong bet on the future of AI
The new funds are expected to power xAI’s ongoing expansion, including the development of one of the world’s largest data centers and further enhancements to its flagship Grok platform, an AI chatbot built to compete with models from OpenAI, Google, and Anthropic.
According to Morgan Stanley, the combination of debt and equity financing helps reduce xAI’s overall cost of capital while broadening its access to long-term capital pools.
This financing structure provides the company with greater financial flexibility as it scales its operations and AI infrastructure.
“We are proud to partner with xAI in this milestone transaction. It underscores our commitment to supporting pioneering companies shaping the future of technology,” Morgan Stanley said in a statement.
Rapid growth and investor confidence
xAI’s rapid rise in the artificial intelligence space has attracted growing investor attention.
Last year, the company raised $6 billion in a Series B round, bringing its valuation to around $24 billion at the time.
- The latest $10 billion in funding could signal even loftier ambitions, as xAI competes with well-funded rivals and doubles down on infrastructure investment.
- The Grok platform—integrated with Musk’s X (formerly Twitter)—is being positioned as a real-time, conversational AI with a unique blend of personality and access to social media data, potentially setting it apart in a crowded generative AI market.
What you should know
XAI’s latest funding comes as the competition in the AI space gets stiffer with each player striving to be the best.
While xAI is building a war chest to unleash new capabilities in AI, its main rivals, OpenAI, Google, and Meta, are also doubling down on their investments and seeking fresh funding to win the AGI battle.
- Earlier in March this year, OpenAI announced one of the largest private funding rounds in history as it raised $40 billion in a round that valued the company at $300 billion post-money.
- SoftBank led the financing, CNBC reported. Other participants included Microsoft, Coatue, Altimeter, and Thrive, all of which are earlier backers in the outfit.
According to the company, the funding would enable it to push the frontiers of AI research even further, scale its compute infrastructure, and deliver increasingly powerful tools for the 500 million people who use ChatGPT every week.
