xAI Raises $10 Billion to Scale Grok AI and Build Global Data Infrastructure

Elon Musk’s artificial intelligence company, xAI, has raised $10 billion in new funding through a combination of debt and equity.

Elon Musk’s artificial intelligence company, xAI, has raised $10 billion in new funding through a combination of debt and equity. According to a post by Morgan Stanley, which helped lead the transaction, the deal includes $5 billion in debt and another $5 billion in a strategic equity investment. The move is expected to lower xAI’s cost of capital while opening access to a broader pool of financial backers. The funds will go toward building one of the world’s largest data centres and advancing its flagship product, Grok.

This announcement follows xAI’s earlier $6 billion funding round in December, which attracted major investors such as Andreessen Horowitz, BlackRock, Fidelity, Lightspeed, Sequoia Capital, and Nvidia. With the new funding, xAI has now secured roughly $17 billion in total capital, making it one of the most well-funded AI companies in the world. It joins a small group of startups attempting to compete directly with the likes of OpenAI, Google DeepMind, and Anthropic in the race to develop large-scale AI platforms.

Founded in 2023 by Elon Musk, xAI was created to develop what Musk describes as “truthful” AI, and it is deeply tied to his vision of building technology aligned with human values. Its main product, Grok, is a conversational AI chatbot integrated into X (formerly Twitter), where it competes with other chatbots like ChatGPT. The platform aims to offer a more transparent and informative experience, shaped by Musk’s well-known concerns about AI safety and bias.

Morgan Stanley, in its post on X, said the structure of the deal helps reduce financing risk and gives xAI more flexibility to scale. The debt portion allows the company to retain ownership while raising capital, and the equity investment brings in long-term strategic partners. While xAI has yet to comment publicly, the deal signals growing confidence from major investors in the startup’s technical direction and leadership.

With this new backing, xAI is expected to accelerate its development efforts, expand its infrastructure, and continue hiring top AI researchers. The company’s ambitions are bold, and this latest funding round positions it to be a major player in the global AI race. As competitors race to build smarter, faster models, xAI is betting that its combination of funding, infrastructure, and Musk’s influence can set it apart.

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Havilah Mbah
Havilah Mbah

Havilah is a staff writer at The Algorithm Daily, where she covers the latest developments in AI news, trends, and analysis. Outside of writing, Havilah enjoys cooking and experimenting with new recipes.

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