Elon Musk’s xAI seeks $4.3 billion in fresh equity funding: Report

Elon Musk’s artificial intelligence startup xAI is in talks to raise $4.3 billion through a new equity round, adding to its recently launched $5 billion debt fundraising effort, Bloomberg News reported on Tuesday (June 17), citing information shared with investors.

Most of $14 billion already spent

According to report, xAI — the company behind the AI chatbot Grok — is seeking the fresh capital partly because it has already used up the bulk of the $14 billion it raised via equity since its founding in 2023.

Internal documents reviewed by the outlet revealed that as of March 31, only $4 billion remained on the company’s balance sheet.

Debt commitments and cost-cutting efforts

Commitments for the $5 billion convertible debt sale are due on Tuesday, the report said, citing a source familiar with the matter. The debt financing is expected to provide xAI with operational flexibility while potentially delaying dilution for existing shareholders.

In a separate cost-cutting move, xAI may also receive a $650 million rebate from one of its hardware manufacturers, according to news outlet's sources. The rebate is expected to ease some of the financial pressure from the company’s heavy infrastructure investments.

Valuation surge

XAI is said to have a valuation of $80 billion at the end of the first quarter, up from $51 billion at the end of 2024, reflecting surging investor interest in the firm’s AI roadmap and its integration with X (formerly Twitter), which xAI acquired earlier this year, the report said.

Musk’s xAI is positioning itself as a formidable challenger to OpenAI and Google DeepMind in the highly competitive AI space.