Elon Musk’s xAI has completed a $5 billion financing of Secured Notes and Term Loans in addition to a $5 billion strategic equity investment, said Morgan Stanley on Monday.
“This transaction, which was oversubscribed and included prominent global debt investors, reflects confidence in xAI’s vision to accelerate scientific discovery and advance humanity’s collective understanding of the universe,” added Morgan Stanley in a social media post.
The combination of debt and equity reduces the overall cost of capital and substantially expands pools of capital available to xAI, it added, noting that the proceeds will support xAI’s continued development of cutting-edge AI solutions, including one of the world’s largest data centers and its flagship Grok platform.
In addition to selling debt, xAI has also been in talks to raise about $20 billion in equity, which would value the company at more than $120 billion, with some investors placing valuations as high as $200 billion.
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Musk’s xAI “world’s biggest supercomputer”, Colossus, was built in only 122 days, outpacing every estimate. It was the most powerful AI training system yet, the company said. “Then we doubled it in 92 days to 200k GPUs. This is just the beginning,” it added. However, the facility has raised major pollution concerns in recent weeks due to having dozens of gas-powered turbines, known to produce several toxic pollutants.
The company’s new facility is part of Musk’s mission to dominate AI, providing computing power to xAI’s chatbot, Grok. The company’s latest moves to finance its growing AI infrastructure come at a time when major competitors like OpenAI and Amazon are heavily investing in data centers. Earlier this year, OpenAI announced that it would help the UAE develop one of the world’s biggest data centers.
