With a $10 billion investment round that is evenly divided between debt and equity financing, Elon Musk’s artificial intelligence venture xAI is stepping up its efforts to take on OpenAI and other AI industry heavyweights. With the money, which Morgan Stanley disclosed Monday, xAI will be able to grow what it refers to as “one of the world’s largest data centers.” It is one of the biggest capital rounds in the AI industry this year.
Oversubscribed Debt Offer Indicates Investor Trust
Morgan Stanley facilitated $5 billion in secured notes and term loans for xAI, stating that “prominent global debt investors” oversubscribed the debt offering. Separately, the business raised an extra $5 billion for strategic equity investment. “This transaction reflects confidence in xAI’s vision to accelerate scientific discovery and advance humanity’s collective understanding of the universe,” Morgan Stanley stated in a release.
“The funding structure increases xAI’s access to long-term financing while lowering its overall cost of capital,” Morgan Stanley said. xAI is reportedly in negotiations to fund an additional $20 billion in stock, with possible valuations between $120 billion and $200 billion.
The Intensification Of The Infrastructure Race
With the money raised, xAI will expand its data center, including its Colossus supercomputer facility in Memphis, Tennessee, and maintain its flagship Grok platform. The system, which was constructed in 122 days and now runs 200,000 Nvidia GPUs, is expected to grow to 1 million GPUs. “We then doubled it to 200k GPUs in 92 days.” xAI said, “This is only the beginning.”
Musk’s X platform is connected with xAI’s conversational AI assistant, Grok, which directly competes with ChatGPT and other well-known models. The Colossus supercluster was used to train Grok 3, which the business launched in February.
More Extensive AI Arms Race
As AI startups vie for financing and processing power, the funding was made. Google and Meta are increasing their investments in artificial general intelligence, while OpenAI raised $40 billion in March at a $300 billion value.
xAI was founded by Musk in March 2023 and has funded a total of approximately $22 billion, including $6 billion in May 2024 and December 2024 rounds. The business paid $33 billion to acquire X Corp. in March 2025, merging the two businesses under the name X.AI Holdings Corp.
Ndubuisi Ekekwe, an expert, commented, “Money everywhere for these bigtechs and that quantity is now quality in the playbook,” pointing out the amount of money needed to compete in AI development.