In a significant financial move, Morgan Stanley is marketing a $5 billion debt package for Elon Musk’s artificial intelligence startup, xAI.
This development comes at a time of heightened public tension between Musk, the world’s richest individual, and U.S. President Donald Trump, adding a layer of complexity to the fundraising efforts.
The financing package, which includes bonds and two loans, underscores the growing importance of AI technology while highlighting the challenges of navigating high-profile personal and political disputes in the business world.
A major financial push for xAI
According to reports from Reuters and Bloomberg, Morgan Stanley is actively pitching a $5 billion debt sale on behalf of xAI, a company founded by Elon Musk to advance human scientific discovery through artificial intelligence.
The package is designed to bolster xAI’s ambitious projects, which aim to compete with other leading AI firms like OpenAI.
This financing effort is one of the largest of its kind for Musk’s ventures in recent times and signals strong investor interest in AI as a transformative industry.
The debt sale includes a combination of bonds and term loans, marketed on a best-efforts basis, meaning Morgan Stanley is not guaranteeing the full amount will be raised but is working to attract a wide pool of investors.
This approach comes after Tesla, another of Musk’s flagship companies, recently saw a significant boost in market capitalization, potentially increasing confidence in Musk-related ventures.
However, the timing of this financial push is complicated by external factors, particularly Musk’s public falling out with President Trump.
The Musk-Trump feud: a complicating factor
Elon Musk’s relationship with Donald Trump has been under scrutiny in recent weeks, with public exchanges between the two creating headlines.
Sources cited by Bloomberg and Reuters note that this feud has coincided with Morgan Stanley’s efforts to secure investors for xAI’s debt package.
While Musk has historically had a complex relationship with political figures, the current clash with Trump, a former ally, has raised questions about potential impacts on his business dealings.
Reports suggest that Morgan Stanley has had to expand its outreach to a broader pool of investors to shore up demand for the $5 billion package.
Some speculate that the public dispute may have caused hesitation among certain investor groups, though there is no direct evidence linking the feud to specific financial outcomes at this stage.
Musk later said some of his posts against Trump were “too far” and regretted some of the posts he made against Trump last year.
The Tesla CEO also deleted some of his posts criticising Trump, including a post where he expressed support for impeaching the president.
Background on xAI and its ambitions
Founded in 2023, xAI is one of Elon Musk’s newer ventures, aimed at accelerating human scientific discovery through advanced AI technologies.
The company has positioned itself as a competitor to industry giants like OpenAI, with a mission to tackle some of the most pressing questions in science and technology.
Musk has been vocal about his vision for xAI, often tying it to broader goals of space exploration and human advancement—themes consistent with his leadership of SpaceX and Tesla.
The $5 billion financing is seen as a critical step in scaling xAI’s operations, potentially funding research, infrastructure, and talent acquisition.
Reports from Reuters also indicate that xAI is seeking a valuation of $113 billion through a separate $300 million share sale, though details on this remain limited. If successful, the combined debt and equity raises could position xAI as a major player in the AI landscape.
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