Elon Musk raises fresh $10 billion from lenders and investors for xAI

Elon Musk’s artificial intelligence company, xAI, has raised $10 billion in fresh capital, according to Morgan Stanley, which handled the financing.

Half of that came from secured notes and term loans, while the other half was picked up from a strategic equity raise. The bank said the debt deal was oversubscribed and involved “prominent global debt investors,” but no individual names were disclosed.

The money is going straight into expanding xAI’s infrastructure and speeding up work on its Grok AI chatbot, which is Elon’s main answer to OpenAI’s ChatGPT and Anthropic’s Claude.

xAI’s goal is to keep building a large-scale AI system that can handle its own development and serve users through Elon’s X platform, formerly known as Twitter. Elon wants to create something he calls “maximally truth-seeking” and says Grok is “anti-woke,” a description that has already drawn controversy for how Grok responds to political topics.

Grok gets funding boost after GPU facility revealed in Memphis

In May, Elon told CNBC that xAI had installed 200,000 GPUs at a supercomputing facility called Colossus, located in Memphis, Tennessee. The site handles training for all of xAI’s models. Elon also said that xAI is now preparing to build a new facility with 1 million GPUs just outside Memphis. He confirmed the chips are being sourced from Nvidia and AMD, the two dominant players in AI hardware.

Morgan Stanley said that this $10 billion injection will support “one of the world’s largest data centers” and help push development on xAI’s flagship Grok platform. That includes continued training of new models. Grok 3, the latest version, was released in February.

In March, xAI acquired X in a deal that valued the platform at $33 billion and placed xAI’s valuation at $80 billion. It’s not yet clear if this most recent funding round has affected that figure. Just last year, xAI raised $6 billion at a $50 billion valuation, according to CNBC.

Elon’s rivalry with OpenAI and Anthropic intensifies

This cash lands at a time when the U.S. AI scene is locked in a funding war. OpenAI, which Elon helped found, closed a $40 billion raise in March that brought its valuation to $300 billion.

Its investors include Microsoft and SoftBank. Meanwhile, Anthropic, which makes the Claude chatbot and is backed by Amazon, hit a $61.5 billion valuation this year and added a $2.5 billion revolving credit line in May.

Elon has been vocal about his disagreements with OpenAI CEO Sam Altman. He’s accused Altman of turning OpenAI into a money-driven company and betraying its nonprofit beginnings. In February, Elon led a group of investors in a $97.4 billion bid to buy OpenAI outright. That bid was rejected.

xAI’s Grok is already active inside X, and Elon’s vision is to keep integrating it across all layers of the platform. But the chatbot has drawn heat. Earlier this year, Grok gave users bizarre responses tied to conspiracy theories like “white genocide” and political issues in South Africa. Elon hasn’t responded to the backlash but continues to promote Grok as a free-thinking alternative.

With $10 billion more in the bank and one of the largest GPU stacks in the country, xAI now has the money to compete head-on. What Elon builds next is up to him—but it will definitely be loud.

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