Elon Musk’s artificial intelligence startup, xAI, is projecting $13.1 billion in annual earnings by 2029, despite posting heavy losses and having a politically charged atmosphere involving the company’s founder and former U.S. President Donald Trump.
Morgan Stanley, the lead banker for xAI, is currently looking to raise $5 billion through a debt offering. In meetings held with prospective investors willing to commit a minimum of $50 million, the bank revealed selected internal figures outlining xAI’s long-term financial targets and current losses.
According to information shared with those investors, xAI generated $52 million in gross revenue during Q1 but recorded a loss of $341 million before interest, taxes, depreciation and amortisation (EBITDA).
Cash flow from operations was negative $220 million. The company had already spent $2.6 billion on capital expenditures and has plans to spend another $18 billion on data centre investments.
Even with the deep red figures, xAI expects a sharp turnaround over the next five years. Forecasts presented show the company hitting $2.7 billion in EBITDA by 2027 and climbing to $13.1 billion by 2029.
On the revenue side, the company aims to close 2025 with $1 billion in gross income and projects $14 billion by the end of 2029.
These figures come as xAI simultaneously seeks a $113 billion valuation through a separate $300 million equity raise. The materialisation of this may depend on Musk’s current political entanglements.
The backdrop to all this is a public clash between Musk and Donald Trump. What began as a difference of opinion over government contracts escalated into a volatile exchange. Musk ultimately declared: “Trump should be impeached.”
This fallout has introduced complications for Morgan Stanley’s fundraising efforts. Some investors are reportedly wary of potential political backlash, especially considering Trump’s history of targeting institutions and individuals who challenge him.
At this stage, it’s undefined how much the conflict has affected xAI’s debt sale, though signs of market nervousness are evident. For instance, the price of a loan tied to X, another Musk-owned company, reportedly dropped by 1.25 points on the same day Musk’s comments were made public.
Efforts are reportedly underway to defuse the stress. According to Politico, the White House has scheduled a private call between Musk and Trump in a bid to ease hostilities.
While investor interest in generative AI remains high, the financial model for many startups is still viewed as a long-term bet. Most require massive upfront capital to build data infrastructure and hire elite AI talent. xAI is no exception.
Neither Morgan Stanley nor xAI have issued formal comments regarding the funding round or the political situation as of the time of filing this report.
