Elon Musk's xAI raises $10 billion in debt and equityNEW!MenuselectSearch quotes, news & videosMenuElon Musk's xAI raises $10 billion in debt and equity as it steps up challenge to OpenAIPublished Tue, Jul 1 20254:37 AM EDTUpdated Tue, Jul 1 20258:37 AM EDTKey PointsxAI, Elon Musk's artificial intelligence startup, raised $5 billion in debt and $5 billion in equity.The funding will go towards xAI's efforts to build out its AI infrastructure and develop its Grok chatbot.xAI's latest raise will help it compete against rivals OpenAI and Anthropic.Elon Musk announced his new company xAI, which he says has the goal to understand the true nature of the universe.Jaap Arriens | Nurphoto | Getty ImagesXAI, the artificial intelligence startup run by , has raised a combined $10 billion in debt and equity, Morgan Stanley said.Half of that sum was clinched through secured notes and term loans, while a separate $5 billion was secured through strategic equity investment, the bank said Monday.The funding gives xAI more firepower to build out infrastructure and develop its Grok AI chatbot as it looks to compete with bitter rival OpenAI, as well as with a swathe of other players including -backed Anthropic. that xAI has already installed 200,000 graphics processing units, or GPUs, at its Colossus facility in Memphis, Tennessee. Colossus is xAI's supercomputer that trains the firm's artificial intelligence. Musk at the time said that his company will continue buying chips from semiconductor giants and and that xAI is planning a 1 million GPU facility outside of Memphis.Addressing the latest funds raised by the company, Morgan Stanley that "the proceeds will support xAI's continued development of cutting-edge AI solutions, including one of the world's largest data center and its flagship Grok platform."XAI continues to release updates to Grok and unveiled the in February. Musk has sought to boost the use of Grok by integrating the AI model with the X social media platform, formerly known as Twitter. In March, in a deal that valued the site at $33 billion and the AI firm at $80 billion. It's unclear if the new equity raise has changed that valuation.XAI was not immediately available for comment.Last year, xAI raised $6 billion at a valuation of $50 billion, .Morgan Stanley said the latest debt offering was "oversubscribed and included prominent global debt investors."Competition among American AI startups is intensifying, with companies raising huge amounts of funding to buy chips and build infrastructure. that valued the ChatGPT developer at $300 billion. Its big investors include Microsoft and Japan's SoftBank.Anthropic, the developer of the Claude chatbot, closed a funding round in March that . The company then received a in May.Musk has called Grok a "maximally truth-seeking" AI that is also "anti-woke," in a bid to set it apart from its rivals. But this has not come without its fair share of controversy. Earlier this year, Grok responded to user queries with unrelated comments about the .Musk has also clashed with fellow AI leaders, including OpenAI's Sam Altman. Most famously, Musk claimed that OpenAI, which he co-founded, has deviated from its original mission of developing AI to benefit humanity as a nonprofit and is instead focused on commercial success. In February, Musk alongside a group of investors, put in a bid of $97.4 billion to buy control of OpenAI. Altman swiftly rejected the offer.— CNBC's Lora Kolodny and Jonathan Vanian contributed to this report.News TipsGot a confidential news tip? We want to hear from you.CNBC NewslettersSign up for free newsletters and get more CNBC delivered to your inboxGet this delivered to your inbox, and more info about our products and services.Advertise With Us© 2025 CNBC LLC. All Rights Reserved. , X.AI Corp., doing business as xAI, is an American company working in the area of artificial intelligence (AI), social media and technology. [10] Founded by Elon Musk in 2023, the company's flagship product is a generative AI chatbot named Grok., XAI laid off about a third of its data annotation team, reducing staff by about 500 workers. The layoffs follow a strategic shift to prioritize specialist AI tutors over generalist roles. XAI's .