Musk’s xAI raises $10 billion to scale up AI ambitions

Elon Musk’s artificial intelligence startup xAI has secured a total of $10 billion in fresh funding, $5 billion in debt and $5 billion in equity as it ramps up efforts to expand its AI infrastructure and accelerate development of its flagship Grok platform, Morgan Stanley announced on June 30. The debt raise, structured through secured notes and term loans, was oversubscribed and attracted several prominent global debt investors, according to a statement shared by Morgan Stanley on social media platform X. In parallel, xAI closed a separate $5 billion strategic equity investment, underscoring growing interest in the AI sector despite early concerns about investor appetite.

The proceeds from both the debt and equity deals will be channelled into developing advanced AI models, building one of the world’s largest data centres, and further expanding the capabilities of xAI’s Grok platform. The company’s flagship product, Grok, is deeply integrated into the X social media platform, which Musk owns. Founded in early 2023, xAI merged with X in March 2025 to more tightly align Musk’s AI ambitions with his broader ecosystem of tech ventures. The company began operating what it claims is the world’s largest supercomputer in Memphis, Tennessee, in December 2024.

Valuation could cross $120 billion

In addition to the latest capital infusion, xAI is reportedly in talks to raise up to $20 billion in further equity, which could push its valuation above $120 billion. Some investors are said to be valuing the company as high as $200 billion, reflecting the rapidly growing interest in next-generation AI infrastructure and tools.

Morgan Stanley’s announcement comes amid intensifying competition among AI developers, as companies race to build more powerful models and data centres. With rivals like OpenAI, Anthropic, and Google DeepMind making significant strides, xAI is positioning itself as a formidable challenger by aggressively scaling its resources.

Musk recently teased the launch of Grok 4, an updated version of the AI model, expected shortly after the July 4 holiday. As the industry heats up, the new funding marks a pivotal moment for xAI in its mission to be at the forefront of artificial general intelligence development.