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Elon Musk’s xAI Secures $10 Billion in Funding for AI Expansion, Morgan Stanley Confirms

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Elon Musk’s artificial intelligence venture, xAI, has successfully raised $10 billion—split evenly between debt financing and strategic equity investment—as it ramps up efforts to scale infrastructure and compete in the intensifying AI arms race, Morgan Stanley confirmed Monday.

According to a statement posted on X, the $5 billion in debt funding includes a mix of secured notes and term loans and was oversubscribed, drawing in prominent global debt investors. Meanwhile, xAI also completed a separate $5 billion equity raise, with Morgan Stanley describing the capital as “strategic”—a likely reference to targeted investments from industry or institutional players.

Earlier reports by Reuters indicated that xAI was on track to finalize the debt round despite tepid early interest. Bloomberg had separately reported that the AI firm was also pursuing an additional $4.3 billion equity round on top of the debt raise, and had even floated a potential $20 billion equity raise that could push the company’s valuation as high as $200 billion. Current investor estimates place xAI’s valuation at over $120 billion.

The new funds will support the development of AI models, the expansion of data center infrastructure, and growth of xAI’s flagship Grok platform, a generative AI chatbot positioned to rival OpenAI’s ChatGPT and Google’s Gemini.

xAI has not issued a public statement, and declined to comment when contacted by Reuters outside of business hours.

The massive funding round highlights investor confidence in Musk’s ability to build a major player in the AI space, leveraging assets across his business empire, including Tesla, SpaceX, and X (formerly Twitter).

Microsoft Plans Thousands of Job Cuts Amid AI Expansion

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Microsoft is preparing to lay off thousands of employees, particularly in its sales division, according to a Bloomberg News report published Wednesday. The move comes as the company accelerates investments in artificial intelligence (AI) and realigns its workforce to support the growing demands of the technology.

The layoffs are expected to be announced early next month, following the end of Microsoft’s fiscal year. While the exact number of job cuts has not been confirmed, sources suggest that the move will impact more than just sales roles. Microsoft declined to comment on the report.

This would mark the second significant round of layoffs in 2025, following cuts in May that affected around 6,000 employees.

The tech giant has committed a record $80 billion in capital expenditure this fiscal year, with most of that spending allocated to expanding data centers and AI infrastructure. These investments are designed to support Microsoft’s growing suite of AI-powered services, including its close partnership with OpenAI and integration of generative AI across its software platforms.

The shift mirrors trends across the industry. Amazon CEO Andy Jassy stated on Tuesday that generative AI and agent technologies would likely reduce corporate workforce needs over the coming years, underscoring how automation and AI are reshaping traditional business roles.

With a global workforce of 228,000 employees as of June 2024, Microsoft is balancing aggressive growth in AI with internal restructuring — a sign of how tech giants are repositioning for the next phase of innovation-driven competition.

Malaysia Investigates Chinese Firm’s Use of Nvidia AI Chips Amid Export Controls

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Malaysia’s trade ministry is currently investigating reports that a Chinese company operating in the country is using Nvidia AI chips and servers for training large language models, according to a ministry statement on Wednesday. The inquiry aims to determine if any domestic laws or regulations have been violated.

The Wall Street Journal previously reported that Chinese engineers arrived in Malaysia in early March carrying suitcases filled with hard drives. They were reportedly working to develop AI models using data centers equipped with Nvidia chips.

These developments come against the backdrop of U.S. restrictions on exports of advanced AI chips, introduced during the Biden administration, which capped the number of AI chips Malaysia could receive. Though the Trump administration later rescinded these curbs, it issued guidance emphasizing licensing requirements if AI chip use is linked to weapons of mass destruction.

Malaysia’s ongoing verification reflects growing global scrutiny over technology transfer and AI development involving Chinese entities.