Elon Musk’s artificial intelligence firm xAI is reportedly in talks to raise $9.3 billion in debt and equity financing – and is projected to burn through more than $1 billion per month year as the AI race heats up.
The company behind snarky AI chatbot Grok is aiming to raise $4.3 billion in an equity round and has told investors that it needs the money in part because it has burned through cash it had previously raised, Bloomberg reported, citing materials it had obtained that were shared with potential investors.
Separately, xAI is on track to close on a $5 billion debt raise led by Morgan Stanley, despite tepid investor demand, according to two people familiar with the matter that spoke to Reuters.
The $5 billion debt sale, which includes a floating-rate term loan, a fixed-rate loan and secured bonds, will be allocated to investors on Wednesday, the two people said, asking not to be identified because the deal is private. xAI did not immediately respond to a request for comment while Morgan Stanley declined.
The xAI offering, which was reported on June 2 as Musk and U.S. President Donald Trump traded barbs over social media, did not receive overwhelming interest from high-yield and leveraged loan investors, said five people briefed on the deal.
The floating-rate loan will be offered with an interest rate of 700 basis points over the Secured Overnight Financing Rate, a benchmark rate used to price bond deals, while the fixed-rate loan and secured notes will pay a yield of roughly 12%, the two people said.
While Musk recently moved to merge xAI with his social media platform X, formerly known as Twitter, the new funds will go toward AI operations, the report said.
Musk’s firm expects to spend about $13 billion in 2025, or more than $1 billion per month, sources familiar with the situation told Bloomberg.
Representatives for xAI did not immediately return The Post’s request for comment. Morgan Stanley declined comment.
The company raised $6 billion from investors as recently as December.
The mogul’s company is locked in intense competition with well-funded rivals like Sam Altman’s OpenAI, Mark Zuckerberg’s Meta and Sundar Pichai’s Google to win the race to develop advanced AI.
All of the firms have poured tens of billions of dollars into efforts to build out the AI data centers and other infrastructure required to train and power the large-language models that underpin their AI products.
XAI has told investors that it has an $80 billion valuation as of the first quarter of this year – up from $51 billion at the end of last year.
With Post wires
