Elon Musk’s xAI Holdings is pushing to raise around $20 billion to fuel his merged artificial intelligence and social media project, according to Bloomberg.

If this round closes, it will become the second-largest startup funding ever, only behind OpenAI’s $40 billion raise earlier this year. The deal would slap a valuation of over $120 billion on the company, according to the report.

The company, announced in March, was born when Elon shoved his AI startup, xAI, together with X, the platform formerly called Twitter. Part of the cash hunt is to clear some of the crushing debt Elon took on when he turned Twitter into a private company and renamed it X.

Bloomberg says X is struggling under the weight of that debt. In March 2024 alone, X paid nearly $200 million just to cover debt interest, and by the end of 2024, its total annual interest bill exploded past $1.3 billion.

Elon and his team have been quietly floating the idea of a huge cash injection with potential backers for a few months now, looking to close the new funding over the next few months.

Musk aims to boost xAI’s value while digging out of debt

The amount xAI is chasing could even grow beyond $20 billion if investor appetite holds up, though the terms of the round aren’t final yet and could change depending on negotiations.

Elon has been looking to stick a “proper value” on xAI too, and he mentioned this during a call with xAI investors earlier this month. xAI also acquired X in an all-stock deal that valued it at $33 billion.

When Elon announced the deal via a post on X, he said, “xAI and X’s futures are intertwined. Today, we officially take the step to combine the data, models, compute, distribution and talent. This combination will unlock immense potential by blending xAI’s advanced AI capability and expertise with X’s massive reach.”

Even though Tesla has struggled, the value of Elon’s private businesses keeps rising. At the end of last year, his rocket company, SpaceX, became the most valuable startup ever after a private deal priced it at $350 billion.

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