Musk’s xAI eyes $4.3B equity raise after $14B already spent

Musk’ legal fight with OpenAI continues amid rising competition.

Elon Musk’s xAI is in talks with Saudi-backed Humain to lease major data centre capacity, aiming to power its growing AI model operations.

According to Bloomberg News, Elon Musk’s AI venture, xAI, is reportedly in talks to raise an additional $4.3 billion through equity investment. However, this would be in addition to the $5 billion debt sale already underway, with commitments due by Tuesday.

Since founding in 2023, xAI has secured $14 billion through previous equity fundraising rounds. The report noted that the new capital injection is needed, partly because the company has spent most of the funding already raised.

Running large-scale AI systems like xAI’s Grok chatbot is expensive, requiring high-end hardware, vast computational resources, and top-tier AI talent in an increasingly competitive market. To help offset costs, xAI may also receive a $650 million rebate from one of its manufacturing partners.

The company acquired the social media platform X (formerly Twitter) earlier this year and was valued at around $80 billion at the end of Q1 2025—up from $51 billion at the close of 2024.

xAI’s funding push comes amid aggressive moves by rivals. In March, OpenAI—Musk’s former company—announced plans to raise $40 billion at a $300 billion valuation, led by SoftBank.

Musk, who co-founded OpenAI in 2015 but left the board in 2018, previously made a $97.4 billion takeover offer for the company. That bid was rejected, and Musk has since taken legal action to block OpenAI’s transition from a non-profit to a for-profit entity.

Would you like to learn more about AI, tech and digital diplomacy? If so, ask our Diplo chatbot!