Elon Musk’s AI firm xAI looks to be burning cash at an alarming rate as it doubles down on computing infra expenses, talent acquisition, and software development. Internal financial documents reviewed by Bloomberg indicate that the company recorded a net loss of $1.46 billion in the September quarter, a sharp increase from the roughly $1 billion loss posted earlier in the year. Over the first nine months of the year, xAI deployed approximately $7.8 billion in cash. When asked to comment by Reuters, the company apparently replied “Legacy Media Lies”.
While losses are widening, xAI’s revenue trajectory is moving in the opposite direction—though from a much smaller base. The company generated $107 million in revenue in the quarter ended September 30, nearly doubling from the previous quarter. The investor update marks the first public engagement from parts of xAI’s newly installed leadership team. Former Morgan Stanley banker Anthony Armstrong joined as chief financial officer, while Jon Shulkin, previously at Valor Equity, took on an expanded executive role.
Gross profit has also improved, reaching $63 million during the quarter, up from $14 million earlier in the year. Despite these gains, operating expenses continue to overwhelm income, leaving xAI with a negative EBITDA of roughly $2.4 billion through September, exceeding the company’s earlier full-year loss projections.
According to reports, executives told investors that xAI is not optimizing for near-term profitability. Instead, the company is pursuing an expansive goal: building a self-sustaining AI platform that can eventually power humanoid robotics, including Tesla’s Optimus robot. ear-term development is focused on rapidly deploying AI agents and foundational software, which leadership described as building blocks for a future AI-native software stack. Internally, this vision has been framed as a pathway toward an autonomous AI ecosystem that could eventually integrate across Musk’s broader portfolio of companies.
A substantial share of xAI’s spending is directed toward physical infrastructure. The company is aggressively expanding its Colossus data center campus in Memphis, Tennessee, with plans that could bring total power capacity close to 2 gigawatts. To support these facilities, xAI has entered financing arrangements to acquire high-end Nvidia chips and has invested heavily in energy storage systems, including Tesla Megapack batteries. To sustain its spending, xAI Holdings (the parent entity encompassing both xAI and X) had closed a $20 billion equity round earlier this week, valuing the business at approximately $230 billion. Backers reportedly include Nvidia, Valor Equity Partners, and the Qatar Investment Authority.
Although xAI operates as a standalone entity, its development is closely intertwined with Musk’s other ventures. Its chatbot, Grok, is already embedded within X (formerly Twitter and is facing its own set of issues) and is also available in Tesla vehicles. SpaceX has invested directly in xAI, reinforcing the cross-company flow of capital and technology. Tesla itself is not currently an investor, despite Musk’s public support for such a move. A non-binding shareholder proposal to invest in xAI failed to pass last year, and Tesla’s board has yet to commit to next steps.
In comparison, other AI firms are aggressively scaling their AI operations as well. OpenAI, for example, leads in revenue scale while Anthropic focuses on rapid growth projections. OpenAI reported $13 billion in 2025 revenue, with an annualized rate reaching $20 billion by year-end.
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