Elon Musk’s artificial intelligence startup xAI has secured $10 billion in fresh funding to ramp up its data center buildout and AI product development. The raise is split evenly between $5 billion in debt financing and $5 billion in strategic equity investment, according to Morgan Stanley (MS).
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Fueling AI Ambitions with $10B in Fresh Capital
The debt package includes secured notes and term loans. Despite earlier reports of weak investor demand, the offering was oversubscribed and drew interest from top global debt investors. The equity component, although separately structured, also originated from strategic investors seeking to support xAI’s long-term growth.
The capital will accelerate the development of AI models, fund new data centers, and expand xAI’s flagship platform, Grok. The company is investing heavily in infrastructure as the AI arms race intensifies, particularly among rivals such as OpenAI, Anthropic, and Alphabet’s (GOOG) DeepMind.
In addition to the $10 billion already raised, xAI is reportedly in discussions to raise an additional $20 billion in equity. If successful, that round could value the company at over $120 billion, with some investors reportedly pricing it as high as $200 billion. Recent transactions have pegged xAI’s valuation at around $75 billion, with secondary share sales reaching $113 billion. That places xAI in rare company among private AI startups.
X Sets xAI Apart from Its Competitors
Musk’s acquisition of X (formerly Twitter) gives xAI a data-rich platform to train and test its AI models, setting it apart from competitors. With capital in hand, the company is positioned to scale aggressively and compete for talent, cloud infrastructure, and enterprise deals.
The funding also reflects growing investor interest in foundation model players as market leaders race to lock in compute power and model performance. xAI’s next moves will likely shape how it compares to the sector’s biggest names.
Is TSLA Stock a Buy, Hold, or a Sell?
Since xAI is still a private company, we opted for Musk’s most well-known company, Tesla, which is publicly traded on Wall Street. Based on 35 analysts, Tesla boasts a Hold rating, with an average TSLA stock price target of $291.31. This implies an 8.30% downside.
