June 3, 2025, 11:33:54 AM IST (Published) 2 Min Read Elon Musk’s artificial intelligence venture, xAI, is reportedly seeking a $113 billion valuation in a new share sale while simultaneously raising $5 billion in debt. According to Bloomberg, Morgan Stanley has launched a sale of debt instruments for xAI, which include a floating-rate term loan, a fixed-rate term loan, and senior secured notes. Early pricing discussions suggest a high cost of borrowing, with interest rates as steep as 12% on the senior notes. Commitments are due by June 17, reports suggest. The proceeds from the debt raise will go toward “general corporate purposes,” sources told Bloomberg, and are expected to support Musk’s heavy investments in AI infrastructure—including a large-scale data centre in Memphis. This fresh capital comes as Musk’s AI startup prepares a $300 million share sale, giving employees the chance to cash out their shares. A larger fundraising round is expected to follow, in which xAI will offer new equity to outside investors, according to the Financial Times. Founded less than two years ago, xAI made headlines earlier this year when it acquired X, Musk’s social media platform formerly known as Twitter. The AI startup is also behind Grok, the chatbot integrated into X as a rival to OpenAI's ChatGPT. That deal, Musk said at the time, valued xAI at $80 billion and X at $33 billion. xAI is one of several Musk-led ventures pursuing aggressive capital raises. In addition to the $5 billion debt offering, Neuralink, his neurotechnology firm, recently raised $650 million, while xAI’s secondary stock sale adds another $300 million to the mix. The debt sale has already drawn more than $3.5 billion in demand, Bloomberg added, underscoring sustained interest in Musk’s AI ambitions. Morgan Stanley, a longtime Musk ally, is leading the financing. The bank previously advised on Musk’s $44 billion takeover of Twitter in 2022 and has since worked to offload the associated debt—successfully clearing the last tranche this April. Continue Reading