Elon Musk’s artificial intelligence startup, xAI, has successfully secured a massive funding package totaling $10 billion—half through debt financing and the other half via a strategic equity investment.
Morgan Stanley, which led the debt round, confirmed the development on Monday, highlighting xAI’s ambition to grow its infrastructure with new data centers to stay competitive in the increasingly crowded AI sector.
According to Morgan Stanley’s announcement on X (formerly Twitter), the $5 billion debt raise comprises a combination of secured notes and term loans.
The investment round was oversubscribed, drawing significant interest from top-tier global debt investors. This suggests strong market confidence in xAI’s long-term vision, despite earlier reports of lukewarm investor enthusiasm.
In fact, Reuters had previously reported that xAI was close to finalizing the deal, even as initial investor demand seemed subdued.
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Equity Talks Signal Larger Growth Ambitions
While the debt funding itself is substantial, xAI is not stopping there. The startup is also reported to be deep in negotiations to secure an additional $5 billion in equity funding, according to Bloomberg News.
This equity component appears to be part of broader plans to fuel xAI’s operational expansion and development of its core offerings, including its proprietary Grok platform and AI-driven data centers.
“The proceeds will support xAI’s continued development of AI solutions, a data center and its flagship Grok platform,” Morgan Stanley stated, underscoring the strategic focus of the capital injection.
xAI did not issue any public statement or respond to Reuters’ request for comment at the time of the report.
Furthermore, reports indicate that the company has been exploring additional equity fundraising opportunities totaling up to $20 billion. If successful, this would place xAI’s valuation north of $120 billion, with some investors reportedly estimating the company could be worth as much as $200 billion.
These aggressive funding efforts illustrate Musk’s determination to ensure xAI becomes a major contender in the AI space, going head-to-head with industry heavyweights in an era of rapid technological evolution.
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