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Media reports claimed that the artificial intelligence startup xAI, founded by tech giant Elon Musk, was burning through $1 billion per month, sparking widespread attention. The message indicated that the cost of building advanced AI models at xAI far exceeded its revenue growth, making the company's financial needs increasingly urgent. However, Musk strongly refuted these reports, calling them "complete nonsense."
Image source note: Image generated by AI, licensed by Midjourney.
Since its establishment in 2023, xAI has been actively seeking debt and equity financing to fill the funding gap, with a target of raising $9.3 billion. Despite this, Musk merged xAI with the social media platform X, valuing the new company formed after the merger at $113 billion, with xAI valued at $80 billion.
According to insiders, xAI's spending rate is particularly significant across the entire AI industry. The company expects to spend more than half of its financing amount within the next three months, with an estimated annual loss of $13 billion. By comparison, competitor OpenAI is expected to generate $12.7 billion in revenue by 2025, while xAI is only expected to generate $5 billion that year, potentially exceeding $2 billion only next year.
Musk's enormous personal charm and resources give xAI reason for optimism. He had previously experienced similar massive losses during the early stages of Tesla and SpaceX, but these projects ultimately succeeded. Musk believes that xAI will be profitable by 2027, although it still needs to race against time to address its massive expenditures.
xAI plans to use its integration with the X platform to leverage its vast data archives to train AI models, thereby reducing expensive data costs. Although xAI is currently undergoing large-scale fundraising, the company remains confident about its future development prospects.
Key points:
🌟 The rumor that xAI spends $1 billion per month has been denied by Musk, who called it "nonsense."
💰 xAI is seeking $9.3 billion in financing to fill the funding gap, with an estimated annual loss of $13 billion.
🚀 Despite massive losses, Musk remains optimistic about xAI's future development and aims to achieve profitability by 2027.
