By Shubhangi Chowdhury
Elon Musk’s AI startup xAI has secured a total of $10 billion in fresh funding, $5 billion in debt and $5 billion in equity to accelerate further in AI space by expanding its AI infrastructure and develop its flagship Grok platform.
The funding was announced by financial partner Morgan Stanley’s Executive Director and Financial Advisor Matt Hansen on Tuesday through a LinkedIn post.
This offering was “oversubscribed and included prominent global debt investors,” according to Hansen.
Hansen mentioned that this transaction shows faith in xAI’s vision, “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.”
This fresh capital will be used to support xAI’s continued development of AI solutions, including one of the world’s largest data centers and its flagship Grok platform.
Grok AI chatbot is currently competing with bitter rivals OpenAI and Amazon backed Anthropic. To stay ahead, xAI has already set up 200,000 powerful computer chips, called GPUs, at its Colossus center in Memphis, Tennessee.
READ: Elon Musk’s xAI to launch chatbot Grok 3 (February 17, 2025)
Colossus is xAI’s supercomputer used to train its AI systems. Musk said the company will keep buying these chips from major chipmakers like Nvidia and AMD. xAI is also planning to build an even bigger center near Memphis that will have 1 million GPUs.
Musk has been trying to increase Grok’s usage by connecting it directly with the X social media app, which was earlier called Twitter. Even Musk has criticized OpenAI’s ChatGPT. He claimed Grok as a more “truth-seeking” alternative to OpenAI’s chatbot.
With this funding, xAI’s total capital raised to about $17 billion. Previously, the AI startup raised $6 billion in a Series C financing round. Andreessen Horowitz, Blackrock, Fidelity, Lightspeed, MGX, Morgan Stanley, OIA, QIA, Sequoia Capital, Valor Equity Partners, Vy Capital, Nvidia, AMD, and Kingdom Holdings were some of the investors who participated in that round.
READ: xAI acquires GenAI video startup Hotshot (March 19, 2025)
Many investors have been putting money into AI chatbot startups recently, showing strong confidence in this technology. For example, Inflection AI (maker of the chatbot Pi) raised $1.3 billion from big names like Microsoft and Nvidia, bringing its valuation to around $4 billion. Another startup, Character.AI, secured $150 million in funding led by Andreessen Horowitz and hit a $1 billion valuation. This round has put the Character.AI at a $1 billion valuation, making it a new member of the highly unicorn list.
As billions of dollars pour into companies like OpenAI, Character.AI, and Inflection AI, tech stocks have seen a boost and investor confidence in AI-driven innovation is rising.