While most entrepreneurs might find juggling a $10 billion fundraising round challenging enough on its own, Elon Musk has managed to secure precisely that sum for his AI venture xAI—split evenly between $5 billion in equity and $5 billion in secured debt—even as former President Donald Trump threatens to “unleash DOGE” upon him in what appears to be an escalating feud over government spending and broader political machinations.
Morgan Stanley orchestrated this financial symphony, structuring debt instruments that include floating-rate term loans yielding approximately 700 basis points over SOFR alongside fixed-rate notes commanding 12-12.5%. The oversubscribed round attracted heavyweight investors including Andreessen Horowitz, Sequoia, BlackRock, Fidelity, NVIDIA, AMD, and Saudi consortium Kingdom Holdings, propelling xAI’s valuation from $80 billion to somewhere between $120-200 billion—though still trailing OpenAI’s commanding $300 billion valuation after its recent $40 billion raise.
This capital injection brings xAI’s total fundraising to approximately $17 billion, with discussions already underway for an additional $20 billion equity round. The timing proves particularly intriguing given Musk’s concurrent political drama with Trump, whose cryptocurrency-referencing threats highlight the peculiar intersection of technological innovation and political theater that seems to follow Musk’s ventures. The combination of debt and equity financing strategically reduces capital costs while expanding available funding pools for the AI company’s ambitious growth plans.
The funds will fuel expansion of xAI’s Memphis-based Colossus supercomputer facility, originally launched with 100,000 graphics cards but now doubled with plans for 800,000 additional GPUs. A newly acquired million-square-foot site near a power plant will accommodate up to 350,000 GPUs, supporting the flagship Grok chatbot‘s development and its integration into social media platform X following Musk’s earlier acquisition. The rapid scaling comes despite community concerns in Memphis about air quality and power grid strain from the expanding data center operations.
Grok’s revenue projections suggest ambitious growth from $1 billion in 2025 to $14 billion by 2029, positioning xAI as a formidable challenger in the AI landscape dominated by OpenAI and Anthropic. The company’s trajectory aligns with broader trends showing institutional adoption driving significant growth across technology sectors.
Whether Musk can navigate both the technical complexities of AI development and the political turbulence surrounding his public persona remains an open question—though his track record suggests he thrives precisely when conventional wisdom declares such multitasking impossible.
