Key Points
- Elon Musk’s AI startup, xAI, lost $1.46 billion in the third quarter of 2025.
- The company spent $7.8 billion in cash in the first nine months of the year.
- The massive spending is going toward building data centers and developing software for humanoid robots.
- The company recently raised $20 billion in a new funding round to fuel its growth.
Elon Musk’s artificial intelligence startup, xAI, is spending money at a staggering rate as it races to build the next generation of AI technology. According to internal documents, the company lost $1.46 billion in the third quarter of 2025 alone, and in the first nine months of the year, it burned through a whopping $7.8 billion in cash.
The massive spending is going toward building huge data centers, hiring top AI talent, and developing the software that will eventually power humanoid robots like Tesla’s Optimus. The company’s executives told investors that their main focus right now is to build out AI agents and other software rapidly.
Despite the heavy losses, xAI’s revenue is growing quickly. The company reported $107 million in the third quarter, nearly double the previous quarter’s results. Still, it’s a long way from its goal of hitting $500 million in revenue for the full year.
To fund its ambitious plans, xAI has been on a fundraising spree. The company recently closed a massive $20 billion equity round from investors including Nvidia and Qatar’s sovereign wealth fund. It has also been raising debt, using a special deal to buy a huge number of Nvidia’s powerful AI chips, which it then rents out to other companies.
Musk is also leveraging his other companies to support xAI. SpaceX has invested in the startup, which has, in turn, purchased Tesla’s Megapack batteries. While a proposal to have Tesla directly invest in xAI was recently voted down by shareholders, the lines between Musk’s various ventures are clearly blurring.
For now, xAI is in a classic startup mode: burn cash to grow fast. But with losses mounting and competition in the AI space intensifying, the pressure is on for Musk’s latest venture to deliver on its grand promises.
