Elon Musk’s artificial intelligence venture, xAI, is on the verge of closing a $9.3 billion equity and debt financing deal, even as recent tensions between Musk and President Donald Trump briefly cast uncertainty over the capital-raising process, the Financial Times reports.
According to sources familiar with the matter, investors have submitted over $5 billion in orders for a bond and loan offering arranged by Morgan Stanley, giving the bank confidence that the full package can be finalized. Alongside this, xAI is also targeting a $4.3 billion equity raise, aimed at expanding its data center infrastructure as it competes with industry leaders like OpenAI, Anthropic, and Google.
The fundraising effort was briefly complicated earlier this month by a public falling out between Musk and Trump on social media. Musk had previously described himself as a close associate of the former president and reportedly highlighted his relationship with the White House in conversations with investors as a strategic advantage. The dispute raised questions among some potential backers, with a few opting out of the deal.
Still, the broader investor base remained interested. One person familiar with the offering said investment firm TPG Angelo Gordon is anchoring the deal with a $1 billion commitment. The debt portion of the financing will be split between fixed- and floating-rate loans and a bond, with yields expected around 12%.
Founded in 2023, xAI has positioned itself as a challenger to established AI firms, developing large-scale models and launching its own chatbot, Grok—a self-described “irreverent” alternative to ChatGPT and Gemini. In March, Musk merged xAI with his social media platform X (formerly Twitter), assigning the combined entity a valuation of $113 billion.
The company is investing heavily in AI infrastructure, especially data centers equipped with high-end processors for training and running large language models. According to internal financial disclosures shared with investors, xAI reported a first-quarter loss of $341 million before interest, taxes, depreciation, and amortization. However, it projects EBITDA exceeding $13 billion by 2029.
For comparison, OpenAI, one of xAI’s primary rivals, has forecast $125 billion in revenue by 2029, although it also expects to remain unprofitable through that time.
Despite short-term turbulence and political distractions, xAI’s fundraising appears on track to close successfully. Commitments are due by Tuesday, with final pricing expected later this week. The capital infusion will provide xAI with the resources it needs to scale its operations and compete in the rapidly evolving AI landscape.
xAI, Morgan Stanley, and TPG declined to comment on the ongoing deal.
