Elon Musk's artificial intelligence company xAI has closed a $10 billion funding round, split evenly between debt and equity financing, as the startup accelerates its push to compete with OpenAI and other AI leaders. The funding, announced Monday by Morgan Stanley, represents one of the largest capital raises in the AI sector this year and positions xAI to expand what it calls "one of the world's largest data centers."
Morgan Stanley arranged $5 billion in secured notes and term loans for xAI, with the bank reporting the debt offering was oversubscribed by "prominent global debt investors."12 The company separately raised an additional $5 billion in strategic equity investment. "This transaction reflects confidence in xAI's vision to accelerate scientific discovery and advance humanity's collective understanding of the universe," Morgan Stanley said in a statement.3
The funding structure reduces xAI's overall cost of capital while expanding its access to long-term financing, according to Morgan Stanley.3 Reports suggest xAI is also in talks to raise another $20 billion in equity, with potential valuations ranging from $120 billion to $200 billion.1
The proceeds will support xAI's flagship Grok platform and data center expansion, including its Colossus supercomputer facility in Memphis, Tennessee.1 The system currently operates 200,000 Nvidia GPUs and was built in 122 days, with plans to expand to 1 million GPUs.23 "Then we doubled it in 92 days to 200k GPUs. This is just the beginning," xAI stated.3
Grok, xAI's conversational AI assistant integrated with Musk's X platform, competes directly with ChatGPT and other established models.4 The company released Grok 3 in February, trained on the Colossus supercluster.2
The funding comes as AI companies compete for capital and computing resources. OpenAI raised $40 billion in March at a $300 billion valuation, while other firms including Google and Meta increase investments pursuing artificial general intelligence.12
Founded by Musk in March 2023, xAI has raised over $22 billion total, including previous rounds of $6 billion in May 2024 and December 2024.34 The company acquired X Corp. in March 2025 for $33 billion, combining both entities under X.AI Holdings Corp.3
"Money everywhere for these bigtechs and that quantity is now quality in the playbook," wrote analyst Ndubuisi Ekekwe, noting the scale of funding now required to compete in AI development.5
