Elon Musk’s xAI going through $1B a month amid talks of new equity funding arise: report

Elon Musk’s generative artificial intelligence startup xAI is going through $1B a month, amid an increase in costs, Bloomberg reported.

The company expects to burn around $13B in 2025, the news outlet added, citing people familiar with the matter. The burn rate is evidenced in the company’s levered cash flow and seen in deal terms with prospective investors of the pending funding round, the news outlet added.

Maker of the Grok chatbot, xAI did not immediately respond to a request for comment from Seeking Alpha.

Earlier on Tuesday, it was reported xAI is seeking to raise an additional $4.3B through an equity offering. The $4.3B in new equity funding would be on top of a $5B debt financing the company is also attempting to close. The company is also reportedly holding a $300M share sale for new investors.

Musk wanted to put a “proper value” on xAI, according to media reports in April. xAI raised $6B in new funding late last year that valued the company at $50B. Some of that funding went towards xAI’s massive data center in Memphis, where it used 100,000 of Nvidia’s (NVDA) H100 GPUs.

The NAACP and an environmental group said on Tuesday they intend to sue xAI over the Memphis data center, amid concerns over air pollution.

In March, xAI acquired Musk’s social network X in an all-stock deal, which propelled xAI to a $113B valuation.

Musk, who also leads SpaceX (SPACE) and Tesla (NASDAQ:TSLA), said in July 2024 he would bring the idea of Tesla investing $5B into xAI to the electric vehicle maker’s board of directors after the idea received nearly two-thirds of “yes” votes in an online poll.

The startup is expected to generate $13B in annual earnings by 2029, Bloomberg reported, citing documents by its banker, Morgan Stanley.