Elon Musk's xAI has secured $10 billion to speed up the development of its AI product Grok and expand its infrastructure.
Funding Structure of xAI
According to Morgan Stanley, the recent financing deal was split equally between secured notes and term loans as well as a strategic equity raise. The debt deal was oversubscribed and attracted 'prominent global debt investors,' although individual names were not disclosed.
Infrastructure Expansion and Grok Development
The funds will be directed towards expanding xAI’s infrastructure and accelerating work on the Grok chatbot, which serves as a key alternative to OpenAI and Anthropic. In May, Musk mentioned that xAI installed 200,000 GPUs at a supercomputing facility called 'Colossus' in Memphis. Additionally, a new facility with 1 million GPUs is planned to be built just outside Memphis.
Competition with OpenAI and Anthropic
Moreover, xAI finds itself embroiled in a fierce competitive landscape in the AI market. OpenAI, which Musk co-founded, closed $40 billion in funding, raising its valuation to $300 billion. Meanwhile, Anthropic, the maker of the Claude chatbot, was valued at $61.5 billion.
With $10 billion secured in this funding round, xAI led by Elon Musk significantly strengthens its position in the AI market, potentially influencing future technology developments.
