OpenAI Isn’t Alone: Even Elon Musk’s xAI Is Reportedly Burning Cash At An Alarming Rate

• XAI had a net loss of $1.5 billion and an operating loss $922 million in the September quarter, according to Bloomberg. 
• The management has indicated internally plans to continue investing in AI, which, among other things, would power Tesla’s Optimus robots.
• XAI recently closed a $20 billion series E funding round.

Elon Musk’s xAI is ramping up spending on AI development, with a current focus on building a self-sufficient AI system to power humanoid robots such as Tesla’s Optimus, even as losses widen, Bloomberg reported on Thursday.

XAI reported a net loss of $1.5 billion in the September quarter, up from $1 billion in the first quarter of 2025, according to internal documents, people familiar with the company's financials, and a recent investor call.

The company’s operating loss increased 7% to $922 million in Q3, even as revenue more than doubled to $107 million. Total revenue in the first nine months of 2025 was $208 million, and is projected to be $500 million for the full year. 

XAI, which encompasses X and xAI, as well as AI operations that support Musk’s other companies, such as Tesla, is privately held and does not disclose its financial results.

Bloomberg also reported details from a recent xAI investor call, where the management discussed future plans. The leadership, including Chief Revenue Officer Jon Shulkin, told investors that xAI’s core focus is now building AI agents and other software at speed.

Those products will feed into what’s called “Macrohard” — a term Musk has said refers to an AI-only software company, the name a play on “Microsoft” — until it eventually can power Optimus. 

Stocktwits previously detailed how xAI is investing heavily to expand its flagship data center campus in Memphis, Tennessee, which Musk has said will be a cornerstone for powering its AI advancements. 

XAI Holdings raised $20 billion in funding from investors, including Nvidia, Valor Equity Partners, and the Qatar Investment Authority, earlier this week. The round valued the company at $230 billion.

AI Players Spend Aggressively

The AI sector is becoming an arms race, with leaders like OpenAI and Google pouring billions of dollars into new AI capabilities and aggressive product rollout schedules.

OpenAI has committed to spending a whopping $1.4 trillion over the next seven years, mainly towards data centers. Alphabet and Microsoft have also indicated plans to further increase their capital expenditures, following already record levels last year. 

The investments have reached a point where they are fueling market concerns that future revenue gains may not even justify the current pace. If they don’t, the stock market, which carries significant weight in Big Tech and AI-linked stocks, could crash.  

xAI’s cash burn rate, which Bloomberg sources report is less than $1 billion a month, is, however, significantly lower than OpenAI's. Musk and his xAI are the most recent entrants in the AI space.

Interestingly, the Tesla founder said in a recent Joe Rogan podcast interview that he was essentially forced to step in after calling for the AI industry to slow down. In fact, in 2023, Musk was part of a group of tech leaders that signed a petition calling on AI developers to rein in the pace of development.

“I came to realize that really there's two choices here: Either be a spectator or a participant. And if I'm a spectator, I can't really influence the direction of AI. But if I'm a participant, I can try to influence the direction of AI and have a maximally truth-seeking AI with good values that loves humanity,” he said on the podcast.

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