Musk’s xAI Burning Through $1B a Month as It Chases $9.3B in New Capital

By Evolution Staff • June 23, 2025

Elon Musk’s AI venture xAI is entering high-stakes territory. According to leaked deal documents obtained by Bloomberg, the company is spending at a rate of over $1 billion per month while attempting to raise $9.3 billion in new funding—half of which could be consumed in the next quarter alone.

Why the Burn Rate Is So High
Building next-generation AI infrastructure is costly. xAI’s largest expenditures reportedly include:

• GPU clusters and compute rentals: Primarily from Oracle and private GPU stack deployments.
  
• Talent acquisition: Massive signing bonuses and poaching incentives for top AI researchers.
  
• LLM training operations: Ongoing model training in direct competition with GPT-4, Claude 3, and Gemini.
  
• Product development: Integration with Tesla’s Full Self-Driving platform and X’s AI layers.
  

What xAI Is Trying to Build

• A general-purpose AI assistant (rumored name: “Grok 2”)
  
• A foundational model with open-source compatibility
  
• AGI research infrastructure parallel to DeepMind and OpenAI
  
• A model that aligns with Musk’s “truth-seeking” philosophy
  

Risks and Criticism
Skeptics warn that the spending spree is unsustainable without clear product-market fit. With competitors like OpenAI projecting profitability in 2029 despite $40B+ raised, xAI’s current trajectory could put pressure on even Musk’s most loyal backers. Others note that xAI’s branding overlap with Tesla and X could blur operational focus and slow execution.

Investor Outlook
Despite concerns, early investor interest remains strong, with several sovereign wealth funds and Gulf-based VCs reportedly circling the round. Musk’s name, combined with the hype surrounding AGI and LLMs, still opens capital doors—even in a tighter funding environment.

Conclusion
xAI is moving fast, burning fast, and betting big. The question now is whether Musk’s moonshot mindset—so successful with SpaceX and Tesla—can survive the steep burn curve of generative AI.

Additional References:

• Bloomberg Business (@bloombergbusiness)
  
• SemiAnalysis (@semianalysis)
  
• Axios Tech (@axios)
  
• TechCrunch AI (@techcrunch)
  
• Elon Musk (@elonmusk)