On Tuesday, Bloomberg quoted investor information that Elon Musk’s artificial intelligence start-up company XAI was negotiating to raise $4.3 billion through equity financing beyond the $5 billion debt financing scheme. It is reported that XAI raised $14 billion through equity financing between the creation of the company in 2023 and the launch of the debt sale earlier this year.
The cost of training and deploying advanced artificial intelligence systems is extremely high, mainly because of hardware inputs, intensive computing needs and the high cost of recruiting skilled personnel in highly competitive markets. It was reported that the development of XAI for the chat robot Grok required new funds, in part because it had already spent most of the funds previously raised.
According to a supplementary report by Bloomberg who was familiar with the transaction later that day, based on the company’s leveraged cash flow, the start-up company in Mask is expected to consume approximately $13 billion — an average of over $1 billion per month — in 2025. Earlier reports cited sources that the subscription commitment for $5 billion in debt financing would end on Tuesday.
In addition, Bloomberg claims that XAI may have recovered $650 million from one of its manufacturers, which would help the company to reduce costs. According to the report, XAI of the social platform was acquired earlier this year, with an estimated $80 billion at the end of the first quarter, a significant increase from $51 billion at the end of 2024.
In March, XAI ‘ s competitor OpenAI indicated that it would raise up to $40 billion from a $300 billion valuation in a new round of financing led by the SoftBank Group.