Musk's xAI receives $5 billion in debt financing, high valuation but alarming money-burning speed

Elon Musk's artificial intelligence startup xAI is reportedly close to completing a $5 billion debt financing. People familiar with the matter revealed that the coverage ratio of investors' needs in this round of financing is about 1.5 times, and the allocation of funds is expected to be completed on Wednesday this week. However, this is only part of the total financing plan of $9.3 billion that xAI is trying to raise.

Despite the initial financing results, xAI's capital consumption rate has attracted great attention in the industry. According to financial documents shared with investors, xAI's current monthly operating expenses have exceeded $1 billion, and it is expected to burn more than half of the funds in the current financing plan in the next three months alone. Based on this calculation, the company may consume about $13 billion in cash throughout 2025, far exceeding the scale of most AI startups.

Since its establishment in 2023, xAI has been committed to developing a human-like general artificial intelligence system with reasoning capabilities, and has tried to compete head-on with giants such as OpenAI, Anthropic, and Google DeepMind at the technical and market levels. The company's flagship chatbot "Grok" has been integrated into Musk's social platform X and applied to multiple scenarios in the Tesla and Neuralink ecosystems.

However, compared with the cautious expansion strategy of its peers, xAI has shown a more aggressive pace of financing and spending. Analysis points out that the current artificial intelligence industry as a whole faces the typical contradiction of "high valuation + low profitability", and xAI's operating model pushes this trend to the extreme. High AI training costs, computing infrastructure investment and competition for top talents are the main factors leading to its surge in spending.

Market commentary believes that although Musk's brand effect and cross-border resources provide support for xAI's financing, if the company cannot achieve large-scale commercialization in the next 12-18 months, its high leverage and high consumption model may bring operational risks.

An investment banker said: "xAI's financing rhythm is even slower than the speed of burning money. Whether it can continue to attract capital injection in the future will determine whether it can survive in the AI 'arms race'."

As of press time, xAI has not yet made an official statement on the progress of financing or the company's valuation.