xAI Spends Over $1 Billion Monthly
on High-Performance Chip Purchases and More
Bloomberg reported on June 17 (local time) that xAI, the artificial intelligence (AI) startup led by Tesla CEO Elon Musk, is in negotiations to raise equity investments totaling $4.3 billion (approximately 5.9 trillion won).
This equity investment is separate from the $5 billion Musk is seeking to raise through loans from bond investors to finance a merger between the social networking service (SNS) platform X (formerly Twitter) and xAI.
xAI, the company behind the AI chatbot "Grok," is pursuing this equity investment because it has already spent a significant portion of its previously raised funds. Since its founding in July 2023, xAI has secured a total of $14 billion in equity investments, but as of the end of March, only $4 billion remained on the company's books.
According to sources, xAI is spending over $1 billion each month and is expected to use up more than $13 billion this year. Bloomberg explained that this is due to the enormous costs involved in building servers and purchasing high-performance chips to train advanced AI models like Grok.
xAI has not secured as many revenue streams as competitors such as OpenAI, the developer of ChatGPT, or Anthropic. While OpenAI expects to generate $12.7 billion in revenue this year, xAI anticipates only $500 million, less than one-twentieth of that amount.
However, Bloomberg noted that xAI may soon catch up to its competitors in terms of revenue. Unlike some competitors that rent chips and servers, xAI is building much of its own infrastructure and has secured direct access to data through X.
The funds xAI is raising this time will be used to operate its AI business. xAI is already constructing the world's largest data center, "Colossus," on a 2.11 million square meter site in Memphis, Tennessee, and plans to dramatically increase the number of graphics processing units (GPUs) installed there from the initial 100,000 to as many as 1 million units.
Meanwhile, Bloomberg reported that this new equity investment is taking place at a time of public conflict between CEO Musk and U.S. President Donald Trump, which has made investors uneasy. To address investors' concerns, xAI has implemented measures to protect their collateral and set a cap on the amount of secured debt the company can take on, preventing it from borrowing excessive amounts.
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