xAI Burns $100M Monthly, Tech Mogul Denies Claims

On June 18, local time, reports emerged stating that the artificial intelligence startup xAI, founded by the tech mogul, was burning through 100 million dollars each month. The reports attributed this to the escalating costs of developing advanced AI models, which were outpacing the company's limited revenue growth.

In response, the tech mogul refuted these claims, stating, "They don't understand the situation. And this is nonsense."

xAI, established in 2023, has been actively seeking debt and equity financing to bridge its funding gap, with a target of raising 930 million dollars. Despite this, the merger of xAI with the social media platform X has resulted in a combined valuation of 113 billion dollars for the new entity, with xAI's valuation standing at 80 billion dollars.

According to insiders, xAI's expenditure rate is notably high within the AI industry. The company is projected to spend over half of its raised funds within the next three months, with an anticipated annual loss of 13 billion dollars. In contrast, competitor OpenAI is expected to generate 12.7 billion dollars in revenue for 2025, while xAI is only projected to earn 500 million dollars for the same year, with a potential to surpass 2 billion dollars the following year.

The tech mogul's significant personal influence and resources provide xAI with a reason to remain optimistic. Having experienced similar massive losses during the early stages of Tesla and SpaceX, these projects ultimately achieved success. The tech mogul believes that xAI will turn a profit by 2027, despite the current need to race against time to manage substantial expenditures.

xAI plans to leverage its integration with the X platform to utilize its vast data archives for training AI models, thereby reducing the high cost of data. While xAI is currently engaged in large-scale fundraising, the company remains confident about its future development prospects.