Billionaire Elon Musk’s artificial intelligence (AI) startup, xAI, was valued at $75 billion in its latest funding round. The company raised a total of $10 billion through a combination of debt and equity financing. Morgan Stanley (MS) advised on the debt transaction and disclosed the news. Interestingly, xAI is also in talks to raise another $20 billion in equity, which could value the company at $120 billion.
Don’t Miss TipRanks’ Half-Year Sale
- Take advantage of TipRanks Premium at 50% off! Unlock powerful investing tools, advanced data, and expert analyst insights to help you invest with confidence.
- Make smarter investment decisions with TipRanks' Smart Investor Picks, delivered to your inbox every week.
The funding will be used to power the firm’s AI ambitions, including the development of its advanced Grok AI model and the construction of the world’s largest data centers. xAI’s valuation has been growing rapidly, underscoring the significant interest investors have in the AI sector. The company also recently acquired Musk’s social media platform, X, for $33 billion in an all-stock deal. The combined company was valued at $113 billion then, highlighting the potential of both sectors.
Here’s the Breakup of xAI’s Latest Funding
According to Morgan Stanley, xAI raised $5 billion each in debt and equity. The debt financing consists of $3 billion in bonds and $2 billion in term loans. The remaining $5 billion was raised through a strategic equity investment. Morgan Stanley did not disclose the names of the investors.
During xAI’s last funding round, held in December 2024, the startup raised $6 billion from investors, including Andreessen Horowitz, BlackRock (BLK), Lightspeed Venture Partners, and MGX. Those funds were utilized in building an AI data center and advancing its Grok model. Musk has said that the latest version of the model, Grok 4, will be launched after July 4.
xAI’s Grok and OpenAI’s ChatGPT are leading competitors in the AI chatbot space, driving rapid advancements in the field. Both companies are continually enhancing their offerings in natural language processing, contextual understanding, and real-time data integration, resulting in more human-like responses and significant progress in model capabilities.
What Is the Best AI Stock to Invest In?
We used the TipRanks Stock Comparison Tool for Best Artificial Intelligence Stocks to determine which stocks are favored by analysts. Currently, Microsoft (MSFT), Meta (META), Alphabet (GOOGL), Micron (MU), Amazon (AMZN), and Nvidia (NVDA) have all earned Wall Street’s Strong Buy consensus rating, with MU stock offering the highest upside potential over the next 12 months.
