Elon Musk’s artificial intelligence lab, xAI, is expected to achieve profitability by 2028 and currently holds around $10 billion in cash. Jonathan Shulkin, who served briefly as xAI’s CFO, told potential investors that the company is “ramping revenue very quickly” and could be cash flow positive in two to three years. xAI is also raising equity, with a planned $15 billion round that already has strong demand, potentially making it larger. The company is using innovative financing methods to accelerate data center construction while reducing credit risk. Anthony Armstrong now serves as xAI’s CFO.
Anthropic, another AI firm, expects to break even by 2028, aligning with xAI’s timeline. xAI’s success depends heavily on access to massive computing power. Building the required data centers can cost $20–30 billion, meaning even with $10 billion on hand, more funding is necessary.
The company is raising capital in two ways:
- Traditional equity financing, as first reported by CNBC.
- A special purpose vehicle (SPV) called Valor Compute Infrastructure (VCI), created by Antonio Gracias’ Valor Equity Partners, which purchases data center hardware, racks of Nvidia chips, and supporting infrastructure, and leases it to xAI.
Valor Equity Partners plans to invest $75–125 million. VCI will pay quarterly cash distributions with a projected 9% internal rate of return.
The SPV plans to acquire $22 billion worth of compute, including $5.3 billion in Nvidia GB200 racks already operational and over $10 billion in GB300 chips slated for early next year.
Shulkin explained that the SPV structure helps reduce the cost of capital. Raising equity for xAI can cost 40–50%, so using this financing method allows the company to fund assets more efficiently without relying solely on expensive equity capital.
