Elon Musk's xAI is projected to lose $13 billion in 2025 — AI project burns $1 billion a month in expenditures

(Image credit: xAI)

As Elon Musk's xAI startup is trying hard to catch up with Anthropic, Google, and OpenAI, it is burning through cash, currently costing around $1 billion each month, according to a Bloomberg report that cites investors who saw the company's books. This year alone, the company reportedly plans to spend around $13 billion, but earn only around $500 million, which is going to leave it deep in the red.

xAI was established in mid-2023 with the aim of becoming the world's leading AI company with the most advanced AI models. To achieve its goal, xAI has spent billions on data centers (one of them now houses a cluster with 200,000 Nvidia Hopper GPUs) and shows no sign of stopping its hardware procurements as it strives to train models that are more advanced than those offered by Anthropic, Google, or OpenAI. Unlike other AI companies that rent GPUs and compute power, xAI is investing in its own systems. Elon Musk announced plans to build a supercomputer with one million Blackwell GPUs for xAI, although it is unclear where the company intends to obtain the funding to support such a project, which is estimated to cost between $50 billion and $62.5 billion.

Despite raising $14 billion in equity since its founding in 2023, xAI had only $4 billion remaining at the end of March 2025. According to investor communications, most of that was expected to be spent by the end of the second quarter. The company also informed investors that it expects to receive a $650 million rebate from a hardware manufacturer, which could slightly reduce pressure on its cash reserves.

As a result, the company is urgently trying to secure $9.3 billion in new funding to cover its costs. Of this amount, $4.3 billion is expected to come from an equity round that is nearing completion, while $5 billion will be raised through debt. For 2026, xAI plans an additional $6.4 billion in equity funding, since with sales projections of $2 billion, it will still be in the red next year. By contrast, OpenAI is expected to generate $12.7 billion this year (according to Bloomberg), though it will not be profitable. However, while executives at xAI project that profitability could be reached by 2027, OpenAI's internal timeline anticipates positive cash flow by 2029, according to Bloomberg. However, to become profitable, xAI will need to either increase its earnings to over a billion per month or cut its costs well below $1 billion a month.

As of the first quarter of 2025, xAI’s valuation climbed to $80 billion, up from $51 billion at the end of 2024. The increase in value, coupled with Musk's track record and influence, has attracted major investors including Andreessen Horowitz, Sequoia Capital, and VY Capital.

Anton Shilov is a contributing writer at Tom’s Hardware. Over the past couple of decades, he has covered everything from CPUs and GPUs to supercomputers and from modern process technologies and latest fab tools to high-tech industry trends.

2 Comments Comment from the forums

edzieba

Same as all the other 'AI' companies: spending billions training LLMs, but nobody wants to pay them since those model's can't actually do anything of significant value.
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jp7189

edzieba said:
Same as all the other 'AI' companies: spending billions training LLMs, but nobody wants to pay them since those model's can't actually do anything of significant value.
The article mentions $12.7B in revenue, so someone is finding it valuable.
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