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xAI reportedly spends $1 billion a month to build its advanced AI models and is attempting to raise $9.3 billion in debt and equity, according to sources cited by Bloomberg.
The burn rate reflects how narrowly xAI is operating. Individuals with knowledge of the company’s financial records indicate that Elon Musk’s artificial intelligence company, which develops the AI model Grok, is allegedly operating near its budget limit.
The cost of doing business in AI is high
If xAI successfully raises the $9.3 million, the company intends to deploy over half of it within the next three months, according to Bloomberg’s source. Annual spending is projected to reach $13 billion in 2025.
Musk denied the report, saying on X that Bloomberg was “talking nonsense.”
xAI allegedly had $4 billion in cash on hand in March 2025. The company is spending the majority of that money on server farms and the advanced chips needed to train AI models, Bloomberg reported.
The increase in demand for AI-ready data centers has led to a boom in investment and construction. High demand for AI chips propelled Nvidia to record revenue in Q4 2024. Global enterprise cloud infrastructure increased by 23% year-over-year between 2023 and 2024, primarily driven by AI investments.
xAI predicts it will make a profit by 2027.
In contrast, competitor and ChatGPT maker OpenAI plans to see a positive cash flow by 2029, according to Bloomberg.
Along with Grok, xAI also makes the Aurora image generator, which is embedded into X for Premium subscribers.
xAI uses some of X’s resources
xAI benefits from overlapping resources with Musk’s social media platform, X (formerly Twitter).
Musk has redirected certain AI chips from X to xAI. Unlike most competitors, X is reportedly investing in its own server infrastructure rather than leasing it. xAI also told investors that it expects a $650 million rebate from a manufacturing partner, the company informed investors, as cited by Bloomberg.
Musk himself is another “X factor,” as his highly visible entrepreneurship and his role as a special advisor to President Donald Trump’s administration, particularly its Department of Government Efficiency, have earned confidence from investors.
Read more about Grok’s inflammatory “white genocide” comments, which xAI attributed to internal tampering.