Elon Musk’s artificial intelligence company xAI has launched a 5 billion dollar debt sale as it eyes a massive 113 billion dollar valuation through a share sale reportedly worth 300 million dollars, according to media sources on Monday, June 2, 2025. The debt package is being arranged by Morgan Stanley, and the funds will be used for general corporate purposes, with commitments due by June 17.

As per Bloomberg News, the debt offering includes a term loan B, a fixed-rate term loan, and senior secured notes. These are typically structured to appeal to institutional investors seeking fixed returns over longer periods. The objective is to bolster xAI’s financial foundation ahead of a significant funding round expected to follow.

In parallel, xAI has initiated a secondary share sale allowing employees to offload shares to early investors. According to the Financial Times, this phase is a precursor to a larger primary equity investment round in which xAI plans to offer new stock to outside investors. The move is seen as a strategy to unlock liquidity for employees while preparing the ground for more substantial backing from venture capital and institutional firms.

The development follows an earlier deal that had valued xAI at 80 billion dollars, and X, formerly known as Twitter, at 33 billion dollars. Musk had disclosed those figures while sharing insights on the broader valuation strategy for his tech ventures.

xAI was launched less than two years ago and has swiftly become a central piece of Musk’s vision to compete with global AI giants like OpenAI, Anthropic, and Google DeepMind. The company’s products and research focus on large language models, real-world AI integration, and leveraging X (formerly Twitter) as a data and testing platform.

In April 2025, Bloomberg News reported that xAI was in talks to raise up to 20 billion dollars from investors as part of a broader initiative that bundles AI with the social media ecosystem Musk is cultivating through his X platform. This integration strategy is meant to combine social data with machine learning to develop superior AI systems, giving xAI a competitive edge in commercial and research applications.

Meanwhile, Musk has made headlines beyond the tech world. He recently stepped down from a brief four-month stint leading the Trump administration’s cost-cutting drive at the Department of Government Efficiency. Though his role there was short-lived and filled with controversy, President Trump stated that Musk would continue to serve as an informal adviser.

Back at Tesla, during an earnings call in April, Musk reiterated his focus on the electric vehicle company, saying he would shift attention back to Tesla’s strategic priorities. This comes after months of scrutiny over Musk's divided attention between Tesla, SpaceX, X, and now xAI.

Despite these multiple commitments, Musk’s push for xAI’s valuation reflects growing investor confidence in the artificial intelligence sector. Market analysts note that AI companies are increasingly attracting premium valuations, especially those connected to influential entrepreneurs and platforms capable of large-scale user data integration.

The current secondary share offering and debt issuance signal a phased capital-raising approach, where initial liquidity events are used to drive up valuation before major institutional rounds. Experts believe this is a calculated move to increase investor appetite while rewarding early employees and insiders.

In terms of broader business strategy, xAI is expected to use part of the capital to scale its AI models, hire top-tier talent, and accelerate product development, possibly launching new commercial AI services integrated into the X platform. The fusion of generative AI tools with social media use cases could become a unique differentiator for the company.

With Morgan Stanley leading the debt deal and a potential 113 billion dollar valuation in sight, xAI is positioning itself as one of the most highly valued startups in the global AI race. Industry watchers now await updates on the upcoming primary funding round, which could potentially redefine the landscape for AI investments in 2025

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