xAI raises $10 billion to expand its Grok chatbot
Elon Musk’s artificial intelligence venture, xAI, has secured a massive $10 billion in combined debt and equity financing, according to a statement from Morgan Stanley. The raise—split evenly between secured notes and term loans, and strategic equity investments—is one of the largest ever for an AI startup and signals Musk’s deepening commitment to competing with leading players like OpenAI and Anthropic.
Aiming at AI Supremacy
The fresh capital will support xAI’s aggressive expansion, including scaling its Grok AI chatbot, building one of the world’s largest data centers, and deploying vast computing infrastructure. Musk’s vision for xAI is rooted in building what he calls a “maximally truth-seeking” alternative to what he sees as ideologically biased AI systems.
In an interview in May, Musk revealed that xAI had already installed 200,000 GPUs at its Colossus supercomputer facility in Memphis, Tennessee, which serves as the training hub for its AI models. Plans are underway for a new site outside Memphis capable of running 1 million GPUs, signaling a leap in scale and ambition.
Grok: A Challenger in the AI Race
xAI launched its Grok chatbot in 2023 and has continued releasing updates, including Grok 3 earlier this year. The chatbot has been integrated with X, which xAI acquired in March in a deal valuing the platform at $33 billion and xAI at $80 billion. Musk is leveraging the user base of X to accelerate adoption of Grok, giving it a distribution advantage over rival models like ChatGPT and Claude.
However, Grok has not been without controversy. Musk’s branding of the AI as “anti-woke” has drawn criticism, and the model has made headlines for generating bizarre or offensive responses. Still, Musk’s pitch—that Grok is more aligned with "truth" and less prone to political bias—resonates with a specific segment of the AI-curious public.
The AI Arms Race
xAI’s massive raise follows similar mega-deals from its competitors. OpenAI recently closed a $40 billion round at a $300 billion valuation, while Anthropic, backed by Amazon and Google, raised funds at a $61.5 billion valuation and secured a $2.5 billion credit line in May.
Musk’s tensions with OpenAI have escalated in recent months. In February, he made an audacious $97.4 billion bid to take control of OpenAI, the company he co-founded but later split from over strategic disagreements. CEO Sam Altman rejected the offer, intensifying the rivalry between the two camps.
What’s Next for xAI?
With billions in the bank and a rapidly growing technical infrastructure, xAI is positioning itself as a serious contender in the AI race. Morgan Stanley noted the funding was “oversubscribed and included prominent global debt investors,” underlining strong confidence in the firm’s potential.
As xAI expands its supercomputing capabilities and continues to refine Grok, the next few months will be crucial in determining whether Musk’s vision of a decentralized, “truth-seeking” AI ecosystem can truly compete with the industry’s most entrenched giants.
