Elon Musk's artificial intelligence venture, xAI, is projected to incur losses of approximately $13 billion in 2025, driven by operating expenses that have reached around $1 billion per month, according to Bloomberg. This information apparently comes from investor sources that have had a cheeky look at the company's financial records. Although xAI expects to generate about $500 million in revenue this year, the anticipated shortfall places it in a precarious financial position.

Massive infrastructure investments and bold ambitions

Founded in mid-2023, xAI set out to become a dominant force in artificial intelligence by building what it claims will be the world's most sophisticated AI models. To support this ambition, the company has invested heavily in hardware infrastructure, including data centers housing an estimated 200,000 Nvidia Hopper GPUs. xAI is prioritizing the acquisition and operation of its own systems, unlike its competitors, OpenAI, Google, and Anthropic, which frequently lease computing resources. This will give it increased control and independence over its own operations, but it means greater start-up costs.

Going beyond this, Musk has also outlined plans for an ambitious supercomputer powered by one million Nvidia Blackwell GPUs, which could cost between $50 – $62.5 billion according to Tom’s Hardware – perhaps even more. It’s unclear at this stage where this money will come from (whilst we’re on the subject, do check out our best graphics card guide if you fancy picking up a more normal amount of these cards).

Cash flow concerns despite significant fundraising

Since its inception, xAI has secured around $14 billion in equity financing. However, as of March 2025, only $4 billion of that capital remained. Investor updates indicate that the remaining funds are expected to be exhausted by the end of the second quarter. A forthcoming $650 million rebate from a hardware supplier may provide temporary relief, but it won't be enough to change the company's overall financial trajectory.

To sustain operations, xAI is now attempting to raise an additional $9.3 billion. This includes $4.3 billion from an equity round currently nearing completion, and $5 billion through debt financing. Looking ahead to 2026, the company anticipates needing another $6.4 billion in equity funding, despite revenue forecasts of $2 billion for the year. These figures suggest continued losses unless drastic cost reductions or revenue increases occur.

xAI vs OpenAI

OpenAI, one of xAI’s chief rivals, is expected to bring in $12.7 billion in revenue this year, although it, too, will remain unprofitable. Again, according to Bloomberg, OpenAI anticipates reaching positive cash flow by 2029. xAI is aiming for an earlier profitability – by 2027 – but in order to do this, it would need to either surpass $1 billion in monthly revenue or drastically reduce its current burn rate. Still, despite all this, investor interest in xAI remains robust, and it’s very possible that the ship can be turned around and end up a profit-churning behemoth.

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Aaron Ritchie

Aaron's laptop knowledge makes him the go-to guy on PC Guide. But he still finds time for features, deals and much more.