Elon Musk's xAI reports $1.46 billion loss as startup rapidly expands operations — what we know

Billionaire Elon Musk’s xAI reported $1.46 billion net loss in the September quarter, compared to $1 billion in the previous one, Bloomberg reported citing internal documents from the artificial intelligence startup.

The company is burning cash quickly, with losses mounting as it spends to build data centers, recruit talent and develop software that will eventually power humanoid robots, according to internal documents.

xAI expenditure reaches $7.8bn in 9 months

In the first nine months of the year, it spent $7.8 billion in cash. Like other fast-growing AI startups, xAI is quickly using what it raised in recent funding rounds, it said in its most recent earnings report and a call that xAI executives held with investors, according to people familiar with the matter.

The company told investors that its goal is to build AI that is self-sufficient and that will eventually power humanoid robots like Optimus — Tesla Inc.’s robot that was created to replace human labor.

On the investor call, xAI leadership, including Chief Revenue Officer Jon Shulkin, told investors that now xAI’s core focus is building out AI agents and other software at speed, said the people, who asked not to be identified discussing private conversations.

Those products will feed into what’s called “Macrohard” — a term Musk has said refers to an AI-only software company, the name a play on “Microsoft” — until it eventually can power Optimus.

The firm’s executives signaled to investors that xAI had the necessary resources to continue spending aggressively. Documents referred to the rapid growth of AI as “escape velocity” — a term borrowed from astrodynamics and often used by Musk to talk about how quickly his companies, including Space Exploration Technologies, can grow.

xAI revenue doubles to $107mn in Sept quarter

XAI revenue nearly doubled quarter-over-quarter to $107 million for the three month period ended Sept. 30, 2025, according to financial documents shared with investors and reviewed by Bloomberg.

A representative for xAI declined to comment.

Elon Musk's businesses are intertwined

While Musk runs several separate businesses and projects, he frequently intertwines their purposes and resources.

• Grok, xAI’s chat bot, has been fully integrated into X, the social network formerly known as Twitter, and is also available in Tesla vehicles.
• SpaceX, Musk’s rocket company, has already invested in xAI, which in turn has spent hundreds of millions on Tesla Megapack batteries.
• While Musk has talked about the potential benefits of formally linking xAI and Tesla, the automaker is not currently an xAI investor. Tesla shareholders voted in November on whether the company should invest in xAI — an idea Musk has supported — but the non-binding proposal did not receive enough votes to pass. Tesla’s board is considering next steps, General Counsel Brandon Ehrhart said at the time.

From raising funds to future plans — what we know

The xAI call with investors offered a chance to hear from newly-appointed leadership at the company. Anthony Armstrong, a former Morgan Stanley banker, joined xAI and X as Chief Financial Officer in the fall, while Shulkin, a partner at Valor Equity, also took a new role at xAI late last year, people familiar with the company said.

Armstrong and Shulkin did not immediately respond to requests for comment. Mike Liberatore, xAI’s prior CFO, resigned from the firm last fall after just three months.

On the investor call, xAI executives were optimistic about the firm’s results, highlighting the revenue growth. Still, it may not meet its annual goal. In June, the firm told investors it hoped for $500 million in revenue for the year. Through September, xAI reported over $200 million in sales.

The company’s gross profit has increased, though, and xAI reported $63 million in gross profit during the third quarter, up from just $14 million in the prior quarter, the documents show. Despite this, xAI’s losses continue to grow. Ebitda — earnings before interest, taxes, depreciation and amortization — were negative. The company reported an ebitda loss of $2.4 billion through September, indicating its earnings have yet to make up for its expenses.

That’s not uncommon for startups, which often require a lot of cash to grow and take time to turn a profit. Still, xAI’s losses were more than initially expected; the firm previously projected an ebitda loss of $2.2 billion for the full year, Bloomberg previously reported.

XAI has not yet disclosed to investors the end-of-year results, which executives said had been positive. XAI has raised at least $40 billion in equity to date, including the latest $20 billion round that the firm announced earlier this month.

The company paid almost $160 million in stock-based compensation through September, a reflection of the AI talent wars heating up.

(With inputs from Bloomberg)