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xAI reports $1.46 billion quarterly loss amid rapid expansion
Elon Musk's artificial intelligence startup xAI posted a net loss of $1.46 billion in the third quarter of 2025, according to internal documents reviewed by Bloomberg. This marks a sharp rise from the $1 billion deficit in the first quarter, as the company burns through cash to erect massive data centers, hire top talent, and build AI systems ultimately aimed at powering humanoid robots like Tesla's Optimus.
Over the first nine months of 2025, xAI spent $7.8 billion in cash. Despite revenue nearly doubling to $107 million in the September quarter, losses far exceeded prior forecasts, with earnings before interest, taxes, depreciation, and amortization hitting -$2.4 billion through September surpassing the full-year estimate of $2.2 billion.
This cash burn accompanies what executives call "escape velocity" growth. This week, xAI closed a $20 billion equity funding round that exceeded its $15 billion target, valuing the firm at around $230 billion. Strategic investors included Nvidia, Valor Equity Partners, Qatar Investment Authority, Fidelity Management & Research Company, and Cisco Investments.
xAI aggressively expands its Colossus data center campus in Memphis, Tennessee, recently acquiring a third building to push total computing capacity toward 2 gigawatts. The site houses over 555,000 Nvidia GPUs, making it the world's largest single-site AI training infrastructure. To support operations, xAI secured financing from Valor Equity Partners and Apollo Global Management for advanced chips and invested heavily in Tesla Megapack batteries for energy storage.
Company leaders told investors xAI prioritizes long-term vision over short-term profitability. Revenue director Jon Shulkin explained in a recent investor call that focus remains on rapidly deploying AI agents and foundational software for Musk's "Macrohard" a play on words evoking an AI-native software giant. The ultimate goal: autonomous AI to power Tesla's Optimus humanoid robots designed to replace human labor.
xAI's Grok chatbot integrates with X, formerly Twitter, and appears in Tesla vehicles. Revenue growth shows promise gross profit hit $63 million in the third quarter, up from $14 million but the company may miss its June target of $500 million in annual revenue, having generated just over $200 million through September.
For context, OpenAI reported about $13 billion in annualized revenue by late 2025, though it too pours billions into infrastructure and research. Former Morgan Stanley banker Anthony Armstrong joined xAI as chief financial officer in October, bringing Wall Street expertise to fuel the aggressive expansion.
