Carmen Arroyo and Jill R. Shah

Tue, Jun 17, 2025, 7:34 AM2 min read

(Bloomberg) -- Elon Musk’s artificial intelligence startup xAI is in talks to raise $4.3 billion through an equity investment on top of the $5 billion it has recently been trying to borrow from debt investors, according to information the company shared with investors who asked not to be identified because it is private.

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Musk’s company, which is responsible for the AI chatbot Grok, needs the new money, in part, because it has already spent most of what it previously raised, the materials shared with investors indicate.

Between its founding in 2023 and when the debt sale was launched this year, xAI raised $14 billion via equity fundraising, according to the materials. But as of March 31, only $4 billion of that was left on the company’s balance sheet, the information showed.

The new equity infusion is luring investors back into xAI’s debt offering, which was being circulated just as Musk’s public spat with President Donald Trump was playing out. The company has also offered changes to the debt documents to assuage investors’ concerns, people familiar with the matter said. The changes make it more difficult for xAI to shift assets, which protects lenders’ collateral, and also set a ceiling on the amount of secured debt it can raise, the people added.

Commitments on the $5 billion debt sale are due Tuesday, according to a different person with knowledge of the matter. In addition to the fresh funding, xAI may also get a $650 million rebate from one of its manufacturers that will help the firm cut costs, people familiar with the matter said.

A spokesperson for the company declined to comment, as did a spokesperson for Morgan Stanley, the bank in charge of xAI’s debt sale.

Huge fundraising rounds have become a standard feature of the fiercely competitive artificial intelligence industry, in which the top players are jockeying to secure the expensive computer chips and infrastructure needed to train advanced AI models like Grok and ChatGPT.

Despite the big spending, potential xAI investors have been told that the company’s valuation grew to $80 billion at the end of the first quarter, up from $51 billion at the end of 2024. Investors in previous rounds have included Andreessen Horowitz, Sequoia and VY Capital.