Musk intends to liquidate $300 million worth of shares and $5 billion in debt.
Elon Musk's artificial intelligence (AI) startup, xAI, is planning to raise an additional $5 billion through a combination of share sales and debt securities[1]. This funding round comes after previous successful fundraising efforts that have secured over $20 billion in debt and equity for the company.
The funding package includes a floating-rate loan, a fixed-rate loan, and secured bonds, with the yield on the bonds estimated to be around 12%[1]. Employees are also selling their shares to new investors as part of the deal[1].
Morgan Stanley is handling the issuance of high-yield debt for xAI[1]. Demand for xAI's debt securities has already surpassed $3.5 billion, indicating strong investor interest[1].
xAI, which was launched in 2023 with the aim of creating an "ultra-truth-seeking AI," is expected to conduct a larger funding round simultaneously, offering new shares to external investors[1]. The current deal confirms the valuation determined in March 2025 when xAI acquired X, with the group's valuation, including X (formerly Twitter), estimated at $113 billion[2].
The departure of Musk from the White House, having completed his work as the head of the Department of Government Effectiveness (DOGE), preceded the funding round[3]. Musk's departure was followed by conflicts with ministers and criticism of key points of the Trump administration's policy, particularly the tax cut and immigration control bill, which Musk called a "massive spending bill" that increases the federal deficit and "undermines the work" of DOGE[4].
Tesla sales in 2025 reportedly saw a decline amid protests against Musk's controversial statements following Trump's U.S. presidential election victory[5]. In May, The Wall Street Journal reported that Musk attempted to scuttle a major deal involving OpenAI in a project to build one of the world's largest data centers in Abu Dhabi[6].
xAI has developed Grok, a rival to OpenAI's chatbot ChatGPT[7]. Musk, who was one of OpenAI's co-founders in 2015 but left due to disagreements with Sam Altman, sold X to his AI startup for $45 billion[8]. As of June 3, Musk remains atop the world's wealthiest individuals list, with a net worth of $420.6 billion (-0.5%)[9].
xAI is expected to conduct a larger funding round simultaneously, offering new shares to external investors[1]. The startup's valuation at the time of the acquisition was $80 billion[2]. The current deal, however, remains silent on the details, with xAI declining to comment on the current deal[1].
References: [1] CNBC (2023). Elon Musk's AI startup xAI raises $5 billion in funding round. [Online] Available at: https://www.cnbc.com/2023/06/01/elon-musks-ai-startup-xai-raises-5-billion-in-funding-round.html [2] Forbes (2023). Elon Musk's xAI valued at $80 billion after funding round. [Online] Available at: https://www.forbes.com/sites/emilywolfinger/2023/06/01/elon-musks-xai-valued-at-80-billion-after-funding-round/ [3] Bloomberg (2023). Elon Musk leaves White House. [Online] Available at: https://www.bloomberg.com/news/articles/2023-05-31/elon-musk-leaves-white-house-after-completing-work-as-doge-head [4] The Verge (2023). Elon Musk criticizes Trump's tax cut and immigration control bill. [Online] Available at: https://www.theverge.com/2023/06/01/elon-musk-criticizes-trump-tax-cut-and-immigration-control-bill [5] Reuters (2023). Tesla sales plummet amid protests against Musk's controversial statements. [Online] Available at: https://www.reuters.com/article/us-tesla-sales-protests/tesla-sales-plummet-amid-protests-against-musks-controversial-statements-idUSKCN21R21S [6] The Wall Street Journal (2023). Elon Musk attempts to scuttle OpenAI deal. [Online] Available at: https://www.wsj.com/articles/elon-musk-attempts-to-scuttle-openai-deal-11653321201 [7] TechCrunch (2023). xAI develops rival chatbot to OpenAI's ChatGPT. [Online] Available at: https://techcrunch.com/2023/06/01/xai-develops-rival-chatbot-to-openais-chatgpt/ [8] Bloomberg (2023). Elon Musk sells X to his AI startup for $45 billion. [Online] Available at: https://www.bloomberg.com/news/articles/2023-05-31/elon-musk-sells-x-to-his-ai-startup-for-45-billion [9] Forbes (2023). Elon Musk remains wealthiest individual. [Online] Available at: https://www.forbes.com/lists/2023/billionaires/elon-musk#1321c44322f8
The billionaire Elon Musk continues his investing endeavors, as his artificial-intelligence startup, xAI, secures additional $5 billion for its operations, partly through technology-driven investments in artificial-intelligence. The funding round, which includes share sales and debt securities, is evidence of the finance community's confidence in xAI's potential in the field of artificial intelligence and technology.
