xAI, the generative artificial intelligence company founded by Elon Musk and the company behind Grok, has raised $10 billion in debt and equity, according to Morgan Stanley. Half of this was secured through notes and term loans, and the other $5 billion was in the form of a strategic equity investment.
The funding enhances xAI’s capacity to improve its infrastructure and develop the Grok AI chatbot, aiming to compete with OpenAI and other rivals, such as Amazon-backed Anthropic.
Earlier this year, Musk revealed that xAI installed 200,000 graphics processing units (GPUs) at a facility in Memphis. Colossus is xAI’s supercomputer used for training AI. Musk plans to continue purchasing chips from Nvidia and Advanced Micro Devices, and plans to establish a 1 million GPU facility outside of Memphis.
xAI released the Grok 3 AI model in February. In March, xAI acquired X (formerly known as Twitter) in a deal that valued X at $33 billion and xAI at $80 billion. It is uncertain if the new equity raise has altered this valuation.
KEY QUOTE:
“Morgan Stanley is pleased to announce the successful completion of a $5 billion financing of Secured Notes and Term Loans for xAI, a leading innovator in artificial intelligence technology. This transaction, which was oversubscribed and included prominent global debt investors, reflects confidence in xAI’s vision to accelerate scientific discovery and advance humanity’s collective understanding of the universe. In parallel, the company separately obtained a $5 billion strategic equity investment. The combination of debt and equity reduces the overall cost of capital and substantially expands pools of capital available to xAI. The proceeds will support xAI’s continued development of cutting-edge AI solutions, including one of the world’s largest data center and its flagship Grok platform. Morgan Stanley is proud to partner with xAI in this milestone transaction, which underscores our commitment to support pioneering companies shaping the future of technology.”
Morgan Stanley statement on X
