Online Reporter
Elon Musk’s artificial intelligence startup xAI is burning through US$1 billion a month as the cost of building its advanced AI models races ahead of the limited revenues, according to people briefed on the company’s financials.
The rate at which the company is bleeding cash provides a stark illustration of the unprecedented financial demands of the artificial intelligence industry, particularly at xAI, where revenues have been slow to materialise.
To cover the gap, Musk’s startup is currently trying to raise US$9,3 billion in debt and equity, according to people briefed on the deal terms, who asked not to be identified because the information is private.
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, the people said.
Over the course of 2025, xAI, which is responsible for the AI-powered Chatbot Grok, expects to burn through about US$13 billion, as reflected in the company’s levered cash flow, according to details shared with investors.
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 and ChatGPT.
Carlyle Group estimates that over US$1,8 trillion of capital will be deployed by 2030 to meet that demand to build out AI infrastructure, chief executive officer Harvey Schwartz wrote in a shareholder letter.
“Model builders will look to raise debt and they’re going to burn lots and lots of cash,” said Jordan Chalfin, senior analyst and head of technology at CreditSights. “The space is very competitive and they are battling for technical supremacy.” — Bloomberg
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