Musk’s xAI Loses $1.46 Billion in Q3 as AI Startup Burns Through Cash Reserves

TLDR

• Elon Musk’s xAI suffered a $1.46 billion quarterly loss in Q3 2025, higher than the $1 billion Q1 loss
• The company spent $7.8 billion of its raised capital in the first three quarters of 2025
• Quarterly revenue doubled to $107 million, but full-year revenue may fall short of the $500 million goal
• A $20 billion funding round valued xAI at $230 billion with backers including Nvidia and Qatar Investment Authority
• The startup aims to develop AI systems that will power Tesla’s Optimus humanoid robots

Elon Musk’s artificial intelligence company xAI recorded a $1.46 billion net loss for the third quarter of 2025, according to internal financial records. The loss marks an increase from the $1 billion the company lost in Q1 2025.

The startup consumed $7.8 billion in cash during the first nine months of 2025. The spending supports xAI’s efforts to construct data centers, recruit engineers, and create AI software.

xAI is working to build artificial intelligence that operates independently. The company plans to use this technology to power Optimus, Tesla’s humanoid robot project designed to perform human labor tasks.

Revenue at xAI showed positive movement during the quarter. The company brought in $107 million for the three months ending September 30, nearly double the previous quarter’s figure.

Total sales through September reached over $200 million. The company’s gross profit climbed to $63 million in Q3, compared to $14 million in the prior quarter.

Company executives told investors xAI might not reach its annual revenue goal. The target of $500 million was established in June 2025.

Funding and Valuation

xAI closed a $20 billion equity funding round recently. Investors in the round included chip maker Nvidia Corp., Valor Equity Partners, and the Qatar Investment Authority.

The funding round placed xAI’s valuation at $230 billion. Executives informed investors the company has enough cash to maintain spending below $1 billion per month for at least one year.

The total equity raised by xAI now stands at $40 billion. The company is pursuing both equity and debt financing to fund operations.

Infrastructure and Operations

Chief Revenue Officer Jon Shulkin explained on an investor call that xAI is prioritizing rapid development of AI agents and related software. These products will contribute to “Macrohard,” Musk’s term for an AI-focused software company meant as a play on Microsoft’s name.

xAI is growing its Colossus data center located in Memphis, Tennessee. The company acquired a third building in the area, bringing total computing capacity to approximately 2 gigawatts.

The startup partnered with Valor and Apollo Global Management to create a special vehicle for purchasing Nvidia chips. More deals are expected as the company continues expanding its infrastructure.

xAI’s EBITDA loss reached $2.4 billion through September. This figure surpassed the company’s earlier forecast of $2.2 billion in EBITDA losses for the entire year.

Stock-based compensation totaled nearly $160 million through September. This reflects the competitive market for artificial intelligence talent.

The company’s Grok chatbot is integrated into X, the social media platform formerly called Twitter. Grok also operates within Tesla vehicles.

xAI Holdings serves as the parent company for both xAI and X. SpaceX has made investments in xAI, while xAI has purchased Tesla Megapack batteries worth hundreds of millions.

Tesla shareholders rejected a non-binding proposal in November to have the electric vehicle company invest in xAI.

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