Elon Musk’s artificial intelligence company xAI is raising funds through a $5 billion debt package arranged by Morgan Stanley while seeking a $113 billion valuation through a secondary share sale. The dual moves signal the startup’s aggressive ambitions in a crowded AI market.
xAI’s bold $5 billion debt raises growth stakes
Morgan Stanley launched the funding package on Monday, which offers a term loan B, a fixed-rate term loan, and senior secured notes to investors. Proceeds are earmarked for general corporate use, and investors have until June 17, 2025 to make their final decision and lock in their portion of the $5 billion loan offering.
According to the Financial Times, xAI is also selling $300 million in stock. While this secondary stock sale won’t bring in new money for the company, it gives early employees a chance to cash out.
Stock sale values xAI at $113 billion
The $5 billion loan indicates that xAI is trying to grow fast and isn’t shy about taking on debt to do it. The stock sale suggests that investors are very excited about the potential of xAI, placing it among other AI giants like OpenAI and Anthropic.
This sale values xAI at a staggering $113 billion. In March, xAI acquired X (formerly Twitter) in a deal that split the valuation between the two businesses: $80 billion for xAI and $33 billion for X.
This move signals Musk’s renewed focus on his businesses after briefly getting involved in politics. In combining social media (X) with artificial intelligence (xAI), Musk is slowly merging the two technologies. Considering that xAI is less than two years old, its rapid growth and massive valuation are remarkable.
Musk’s AI and social media vision takes shape
Looking ahead, investors will be watching closely for details on xAI’s larger equity fundraising round, which is expected to follow this initial $300 million stock sale. That offering could bring in significantly more capital and further cement xAI’s place as one of the most valuable AI startups.
Analysts are also eager to see more details on xAI’s roadmap — including how its technology will be deployed, such as through direct integration with X or as part of broader AI offerings.
With the recent acquisition of X and its deep ties to Musk’s broader tech ecosystem, xAI appears to be central to his long-term vision. xAI’s next moves will offer more clues about how Musk intends to position the company in the increasingly competitive AI landscape.
See eWeek’s coverage of the NAACP demanding that an xAI “dirty data center” in Memphis is shut down.