Elon Musk seeks $5 billion for xAI Corp. after shifting focus from politics to ramping up AI investments.
In Short:
Elon Musk is raising $5 billion in debt for his AI startup, xAI Corp, to expand infrastructure, particularly a major data centre in Memphis. This funding move follows his exit from political involvement and comes with strong investor interest, evidenced by already surpassing $3.5 billion in demand.
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.
