Elon Musk’s xAI burning through US$1 billion a month as costs pile up
The artificial intelligence start-up is seeking to raise US$9.3 billion, with plans to spend over half of it in just the next three months
Elon Musk’s artificial intelligence start-up xAI is trying to raise US$9.3 billion in debt and equity, but even before the money is in the bank the company has plans to spend more than half of it in just the next three months, according to deal terms shared with investors.
The rate at which the company is raising funds and tearing through cash offers a stark illustration of the unprecedented financial demands of the artificial intelligence industry, and the relatively meagre revenues it is bringing in so far, at least when it comes to xAI.
Musk’s start-up, which is responsible for the AI-powered chatbot Grok, expects to burn through about US$13 billion over the course of 2025, or more than US$1 billion each month, as reflected in the company’s levered cash flow, according to the people familiar with the deal terms who asked not to be identified because the information is private.
As a result, its prolific fundraising efforts are just barely keeping pace with expenses, the people added.
A spokesperson for the company declined to comment.
The losses are due, in part, to the huge costs that all AI companies face as they build the server farms and buy the specialised computer chips that are needed to train advanced AI models like Grok.