Elon Musk seeks $5 billion for xAI Corp. after shifting focus from politics to ramping up AI investments.

Elon Musk is raising $5 billion in debt for his artificial intelligence startup, xAI Corp. This move comes after he announced his departure from political involvement.

Morgan Stanley is managing the debt sale, which features a double-digit interest rate. The funds will support Musk’s expansion of AI infrastructure, particularly a significant data centre in Memphis.

Musk’s shift away from politics follows his role as an adviser to President Donald Trump during the 2024 election, where he was a prominent backer.

Debt demand

The debt offering includes a floating-rate term loan, a fixed-rate term loan, and senior secured notes, with expected commitments by June 17. Early pricing suggests a floating-rate loan at 7 percentage points over the benchmark and around a 12% yield on the senior notes. Demand for the debt has already surpassed $3.5 billion.

Musk’s political presence received criticism, coinciding with a 20% decline in Tesla’s stock since the new administration took office. Additionally, he has raised $650 million for Neuralink and is selling $300 million in xAI stock.

Musk has merged xAI with his platform X into XAI Holdings and is significantly investing in the Memphis data centre dubbed Colossus. According to past reports, he has been in discussions to secure around $20 billion in funding, reflecting strong investor interest in artificial intelligence.