🖼 xAI has burned over $10 billion and is negotiating a new round of $4.3 billion in financing

xAI Has Burned Over $10 Billion and Is Negotiating a New $4.3 Billion Financing Round

According to documents disclosed to potential investors, Elon Musk's artificial intelligence enterprise xAI is actively preparing for a new round of equity financing of $4.3 billion. This is only a few months away from the $5 billion debt financing led by Morgan Stanley earlier this year, and it is reported that the final subscription agreement for this debt financing will be finalized this week.

xAI, known for developing the AI chatbot Grok, has consumed most of the $14 billion in raised funds since its establishment in 2023. As of March 31, there was only $4 billion in cash left on the balance sheet. The company may receive a $650 million rebate from its manufacturing partners, which could ease some of the financial pressure.

This huge financing highlights the astonishing cost of the AI arms race. From computing power infrastructure to the supply of next-generation chips, building large-scale foundation models has not only become a technical challenge but has also evolved into a capital-intensive "land grab."

Elon Musk's recent move to merge xAI with his social media platform X may bring synergies, but the proceeds from this financing will be directly used to accelerate xAI's AI research and development. It is revealed that the company's valuation has significantly increased and is expected to reach $80 billion by the end of the first quarter of 2025, a substantial jump from $51 billion at the end of 2024.

Behind the soaring valuation is the astonishing money-burning speed - perhaps precisely because of this. Institutional investors such as Andreessen Horowitz, Sequoia Capital, and VY Capital participated in the previous financing, and early signs show that they still remain optimistic.

In the current market environment where most start-ups have difficulty raising funds, xAI's ability to continuously attract billions of dollars in financing may reflect investors' recognition of Elon Musk's vision - or their expectation that Grok can compete with AI leaders such as ChatGPT.

In any case, this sends a clear signal: The key to winning the AI race is not only about talent or models but also about the scale of financing, the speed of burning money, and the ability to expand.

via cnBeta.COM - Chinese Industry Information Station (author: Source: Global Market Broadcast)