Elon Musk’s AI startup Xai raises $4.3 billion in equity funding in addition to $5 billion in debt transactions during the surge in AI costs

Just a few weeks after the report, the startup has returned to the headline with another fundraising push, as Elon Musk’s Xai is about to raise $20 billion at a $120 billion valuation. This time, the company is focusing on a $4.3 billion stock investment, Bloomberg reported Tuesday.

New pay increases will sit on a continuous $5 billion debt round, with a reported commitment scheduled. Bloomberg cited information shared with investors and those familiar with the issue.

“Elon Musk’s artificial intelligence startup Xai is currently in talks to raise $4.3 billion through a $5 billion stock investment it has recently been trying to borrow from debt investors.

Since its founding two years ago, Xai has already brought in $14 billion through stock funding. Those figures do not include the $5 billion debt they are currently seeking. Morgan Stanley declined to comment despite his running point for the debt sale.

Xai’s Cash Burn seems to be catching up to it. Building and operating advanced AI systems is not cheap. Costs rise rapidly between specialized hardware, large computational resources and talent warfare. According to the report, Xai already has experienced most of the capital he grew up in before.

There may be a bit of a breathing room. One of the Xai manufacturers is reportedly offering a $650 million rebate that will help cut some of these costs.

The company best known for Grok Chatbot is worth $80 billion at the end of the first quarter of this year and is a jump from $51 billion at the end of 2024. It also acquired X earlier this year and provided a social platform to plug in AI systems.

Meanwhile, Openai (a former project for Musk) is working on a much larger round. The company aims to raise up to $40 billion at a valuation of $300 billion, with SoftBank expected to lead the deal.

Launched by Musk in July 2023, Zai has fulfilled its mission to explore the deepest mysteries of the universe. The Xai team includes top talent from companies such as Google Deepmind, Openai, Microsoft Research, and Tesla. This drives advances in Deepmind’s Alphacode and Openai’s GPT-3.5 and GPT-4. Musk appears to position Xai as a terrifying player in the AI ​​space, each aiming to compete with giants such as Openai, Google and Anthropic, known for their flagship AI models.

Musk co-founded Openai in 2015, but left the board in 2018, and has since expressed skepticism about the direction of big technology in AI, citing concerns about potential censorship. Musk’s recent AI vision includes “truth-focused” AI designed to counter products such as Google’s Bard and Microsoft’s Bing AI by exploring basic truths about the universe.