Musk’s xAI Spends Nearly $8 Billion, Unveils Optimus Strategy

xAI Faces Mounting Losses Amid Rapid Expansion

Photographer: Stefani Reynolds/Bloomberg

Elon Musk’s artificial intelligence venture, xAI, is experiencing significant financial losses as it invests heavily in building data centers, attracting top talent, and developing advanced software intended to power future humanoid robots, according to confidential company records.

Internal documents reveal that xAI posted a net loss of $1.46 billion in the September quarter, an increase from $1 billion in the first quarter. Over the first nine months of the year, the company spent $7.8 billion in cash.

Trending Stories from Bloomberg

Like many rapidly scaling AI firms, xAI is quickly depleting the funds it secured in recent investment rounds, as detailed in its latest financial report and during a recent investor call, according to sources familiar with the discussions. The company outlined its ambition to create self-reliant AI systems that could eventually operate humanoid robots such as Optimus, Tesla’s robot designed to automate human labor.

Photographer: Stefani Reynolds/Bloomberg

During the investor call, xAI’s leadership, including Chief Revenue Officer Jon Shulkin, emphasized that the company’s immediate priority is to accelerate the development of AI agents and related software. These innovations are part of a project Musk has dubbed “Macrohard”—a nod to Microsoft—envisioned as a software company focused solely on AI, with the ultimate goal of powering the Optimus robot.

Executives assured investors that xAI possesses the resources necessary to maintain its aggressive investment pace. The company described the explosive growth of AI as reaching “escape velocity,” a term Musk often uses to describe the rapid expansion of his ventures, including SpaceX.

Financial records indicate that xAI’s revenue nearly doubled from the previous quarter, reaching $107 million for the three months ending September 30, 2025.

xAI declined to provide a comment for this story.

Although Musk oversees several independent enterprises, he frequently combines their objectives and assets. For example, Grok, xAI’s chatbot, is now fully integrated into X (formerly Twitter) and is also available in Tesla vehicles. SpaceX, Musk’s aerospace company, has invested in xAI, which has in turn spent hundreds of millions on Tesla’s Megapack battery systems.

Tesla and xAI: Potential Collaboration

While Musk has publicly discussed the advantages of a formal partnership between xAI and Tesla, Tesla is not currently an investor in xAI. In November, Tesla shareholders voted on a proposal to invest in xAI—a move Musk supported—but the measure did not pass. Tesla’s board is still evaluating future actions, according to General Counsel Brandon Ehrhart.

At present, xAI Holdings, which oversees both xAI and X, is focused on securing additional capital to support its substantial expenditures. The company recently completed a $20 billion equity funding round, attracting investors such as Nvidia Corp., Valor Equity Partners, and the Qatar Investment Authority, bringing its valuation to $230 billion. This influx of capital is expected to sustain the company for at least another year, as xAI’s monthly investment spending remains below $1 billion. Financial documents show that nearly $8 billion was spent on investments in the first nine months of 2025.

xAI has raised funds through both equity and debt. The company has collaborated with Valor and Apollo Global Management to create a special purpose vehicle for purchasing Nvidia chips and plans to pursue additional deals to expand its Colossus data center in Memphis, Tennessee. The Memphis facility is already set for further expansion, with a recent acquisition of a third building expected to boost computing capacity to nearly 2 gigawatts, according to Musk.

Leadership Changes and Financial Outlook

The investor call also introduced new members of xAI’s leadership team. Anthony Armstrong, formerly of Morgan Stanley, joined as Chief Financial Officer in the fall, while Jon Shulkin, a partner at Valor Equity, assumed a new role at xAI late last year. Armstrong and Shulkin did not immediately respond to requests for comment. Mike Liberatore, the previous CFO, left the company after just three months last fall.

Executives expressed optimism about the company’s financial performance, highlighting strong revenue growth. However, xAI may fall short of its annual revenue target. In June, the company aimed for $500 million in revenue for the year, but by September, it had achieved just over $200 million in sales. Gross profit has improved, with $63 million reported in the third quarter, up from $14 million in the previous quarter.

Despite these gains, xAI’s losses continue to widen. The company reported a negative EBITDA (earnings before interest, taxes, depreciation, and amortization) of $2.4 billion through September, exceeding its earlier projection of a $2.2 billion loss for the full year. Such losses are typical for startups in high-growth phases, but xAI’s figures surpassed initial expectations. The company has not yet shared its year-end results with investors, though executives indicated they were positive.

To date, xAI has secured at least $40 billion in equity funding, including the most recent $20 billion round. The company spent nearly $160 million on stock-based compensation through September, reflecting the fierce competition for AI talent.

Reporting assistance by Ed Ludlow and Denise Wee.

Popular Reads from Bloomberg Businessweek

©2026 Bloomberg L.P.