Elon Musk’s xAI Holdings is in talks with investors to raise around $20 billion in a deal that would value the company at more than $120 billion, according to sources cited by Bloomberg. If the deal goes through, it would be the second largest funding round of all time, behind only OpenAI’s $40 billion financing earlier this year.
Notably, xAI Holdings was formed last month following the merger of xAI (the company behind popular chatbot Grok) and X (the social media platform formerly known as Twitter). Musk had bought Twitter at a valuation of $44 billion in late 2022, but sold the company to his own AI startup for $33 billion in March.
“This combination (of X and xAI) will unlock immense potential by blending xAI’s advanced AI capability and expertise with X’s massive reach.” Musk had said after the merger last month.
What does Elon Musk want to do with new funding?
Reportedly, xAI Holdings may use some of the new funding to pay down the debt that Musk took on when he took Twitter private.
A previous Bloomberg report revealed that the debt was weighing on the social media company, even though its balance sheet is improving with stabilising advertising revenue and an optimistic investor outlook due to Musk’s close relationship with US President Donald Trump.
Last month, X paid about $200 billion in debt service, and annual interest expenses were more than $1.3 billion at the end of 2024. X’s heavy debt has been a problem not only for the social media company, but also for the banks that helped Musk buy Twitter.
However, since the creation of XAI Holdings, Musk and his colleagues have been reaching out to investors to put more money into the combined entity. Reportedly, the prospective round is currently in the early stages and the actual amount to be raised may even go beyond $20 billion.
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