Elon Musk's xAI raises $10B in debt and equity as it faces off against Sam Altman's OpenAI
The sum consists of $5 billion through secured notes and term loans, and the other half comes from a strategic equity investment, the bank said in a post on X, Musk's social media platform formerly known as Twitter.
'This transaction, which was oversubscribed and included prominent global debt investors, reflects confidence in xAI's vision,' Morgan Stanley said in a statement.
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3 Elon Musk's xAI has raised a combined $10 billion in debt and equity, according to Morgan Stanley.
REUTERS
It will 'support xAI's continued development of cutting-edge AI solutions, including one of the world's largest data center[s] and its flagship Grok platform.'
XAI did not immediately respond to The Post's request for comment.
The funding will help Musk compete with rivals, like arch-nemesis OpenAI and its CEO Sam Altman, as firms scramble to build power-hungry data centers that can support language learning models.
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Musk's xAI has already installed 200,000 graphics processing units (GPUs) at its Colossus facility in Memphis, Tennessee, the world's richest person said in May.
At the time, Musk said he plans to continue buying chips from Nvidia and AMD, and that xAI is looking to build a separate 1-million-GPU center near Memphis.
The company unveiled its latest chatbot, Grok 3, in February. Though the AI bot is available on other platforms, Musk has woven the bot into X as well in an attempt to boost its userbase.
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His AI firm acquired X in March in a deal that valued the social media site at $33 billion – less than the $44 billion Musk paid for Twitter in 2022 – and xAI at $80 billion, though this latest funding could have changed that valuation.
3 xAI has installed 200,000 graphics processing units at its Colossus facility in Memphis, Tennessee, Musk said.
ALI HAIDER/EPA-EFE/Shutterstock
Last year, xAI raised $6 billion at a valuation of $50 billion, according to CNBC.
Meanwhile, OpenAI recently closed a $40 billion round that valued the ChatGPT maker at $300 billion, while an Anthropic fundraising round raised the company's valuation to $61.5 billion.
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Musk has tried to paint Grok as a 'woke' chatbot to stand out from the crowd, but that hasn't come without its fair share of controversy.
The bot in May sparked confusion when it responded to unrelated user queries with bizarre mentions of 'white genocide' in South Africa, telling users it 'appears I was instructed to address' it.
3 Sam Altman attends Jeff Bezos' wedding in Venice.
AFP via Getty Images
And xAI has been in fierce competition with OpenAI, which Musk co-founded with Altman in 2015 before cutting ties with the firm in 2018.
Musk has claimed that OpenAI has branched away from its original mission to act as a nonprofit to focus on profit.
He made an unsolicited $97.4 billion bid for OpenAI earlier this year, which Altman quickly rejected with a jab at Musk: 'I feel for the guy. I don't think he's a happy person.'
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