• by Colin Kirkland , July 23, 2025

Following a boost in subscription growth stemming from xAI’s Grok 4 chatbot offerings, Elon Musk’s artificial intelligence (AI) company is attempting to secure $12 billion in funding from private investors as a way to jump ahead of industry competitors like OpenAI, Meta, Microsoft, Google and Anthropic. 

According to a report from The Wall Street Journal, Antonio Gracias and his investment firm Valor Equity Partners are in talks with a group of lenders to raise the capital for xAI. 

The money would be used “to buy a massive supply of advanced Nvidia chips that would be leased to xAI for a new jumbo-sized data center meant to help train and power the AI chatbot Grok,” The Journal explains. 

Notably, xAI is competing with tech giants that are also committed to building data centers across the globe -- including Meta, which announced plans to construct a series of multi-gigawatt centers in the United States slated to be operational sometime next year. 

Currently, xAI has one giant data center based in Memphis, Tennessee, with plans to build a new one -- “Colossus 2” -- with the money it hopes to raise from Valor. 

Training competitive AI models costs billions of dollars, and Musk is making moves to raise and strategically disperse funds. Earlier this month, for example, Musk’s SpaceX invested $2 billion into xAI. The company is also investing its current funds into potential revenue-boosting features, including NSFW AI companions -- powered by Grok 4 -- which xAI is paying engineers $440,000 salaries to develop.

However, as The Journal made clear in its reporting, xAI is at a monetary disadvantage compared to OpenAI and Anthropic, which have partnered with existing cloud-computing giants willing to absorb costs. By building its own AI infrastructure, xAI is expected to burn around $13 billion in cash this year. 

Historically, Valor has invested in other Musk-owned enterprises, including SpaceX, Tesla, SolarCity, The Boring Company, and Neuralink.

If the firm is successful in raising billions for xAI, it would help the AI company reach its goal of powering Grok with one million Nvidia chips. 

If this were to become a reality, Grok would far overpower other chatbots. For comparison, Meta’s AI endeavors are powered by 350,000 chips, while OpenAI has around 200,000 chips in use.

The Journal says potential investors are sharing concerns about xAI’s $5 billion in corporate debt -- which carries a 12.5% yield -- but would be able to rent out the Memphis datacenter to competing AI companies if xAI defaults on payments.