Elon Musk Seeks $5 Billion for AI Expansion Through xAI Bond Issuance

Elon Musk is shifting his focus back to business. His artificial intelligence startup, xAI Corp., is preparing a $5 billion bond issuance, aiming to fund advanced AI infrastructure and datacenter expansion. The entire deal is being led by Morgan Stanley, a long-time Musk ally. In parallel, Musk is selling $300 million worth of xAI shares and recently secured $650 million in new funding for Neuralink. It's clear that Musk is reinvesting in his core tech ventures as he steps away from political involvement.

From Politics Back to Innovation Musk recently announced his withdrawal from political engagement, where he had become a key advisor and supporter of Donald Trump’s 2024 presidential campaign. He also briefly led a government department aimed at improving federal efficiency. However, during his time in Washington, he faced intense criticism, and Tesla’s stock dropped by 20%. Now, Musk is channeling his energy into projects like xAI, aiming to challenge the likes of OpenAI and Google in the race for artificial intelligence supremacy.

Bond Structure to Fund Colossus Datacenter The xAI debt issuance is reportedly structured into three parts: 🔹 Term Loan B

🔹 Fixed-rate Term Loan

🔹 Senior Secured Notes The funds will be used for general corporate purposes, with the debt maturing on June 17. A significant portion is expected to support expansion of the Colossus datacenter in Memphis, which already runs 200,000 GPUs to train AI models. Musk revealed plans in May to add another million GPUs in the same region.

xAI Merges with X Social Network Under XAI Holdings Musk has consolidated xAI with the social platform X (formerly Twitter) under the holding company XAI Holdings, creating synergy between AI development and digital communication. Bloomberg previously reported that xAI is in talks to raise up to $20 billion, underlining strong investor interest and Musk’s sway in tech and finance.

Morgan Stanley: A Trusted Partner Returns Morgan Stanley is a familiar name in Musk’s financial playbook—the bank led the financing for Musk’s Twitter acquisition in 2022, arranging $44 billion in debt. Originally intended for quick resale, the loan remained on bank balance sheets due to Twitter’s volatile performance and Musk’s unpredictable decisions. It wasn’t until this spring that Morgan Stanley offloaded the remaining debt, bolstered by renewed optimism in Musk’s ventures. The xAI bond issuance marks another major show of confidence in the billionaire’s vision.

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