Elon Musk's xAI raises $10 billion in debt and equity as it steps up challenge to OpenAI

The funding will go towards xAI's efforts to build out its AI infrastructure and develop its Grok chatbot

XAI's raise will help it compete against rivals OpenAI and Anthropic

Elon Musk announced his new company xAI, which he says has the goal to understand the true nature of the universe

Jaap Arriens | Nurphoto | Getty ImagesXAI, the artificial intelligence startup run by Elon Musk, has raised a combined $10 billion in debt and equity, Morgan Stanley said

Half of that sum was clinched through secured notes and term loans, while a separate $5 billion was secured through strategic equity investment, the bank said Monday

The funding gives xAI more firepower to build out infrastructure and develop its Grok AI chatbot as it looks to compete with bitter rival OpenAI, as well as with a swathe of other players including Amazon-backed Anthropic

Colossus is xAI's supercomputer that trains the firm's artificial intelligence

Musk at the time said that his company will continue buying chips from semiconductor giants Nvidia and Advanced Micro Devices and that xAI is planning a 1 million GPU facility outside of Memphis

Addressing the funds raised by the company, Morgan Stanley that "the ceeds will support xAI's continued development of cutting-edge AI solutions, including one of the world's largest data center and its flagship Grok platform. "XAI continues to release to Grok and unveiled the Grok 3 AI model in February

Musk has sought to boost the use of Grok by integrating the AI model with the X social media platform, formerly known as Twitter

It's un if the new equity raise has changed that valuation

XAI was not immediately available for

Last year, xAI raised $6 billion at a valuation of $50 billion, CNBC reported

Morgan Stanley said the debt offering was "overd and included minent global debt investors. "Competition among American AI startups is intensifying, with companies raising huge amounts of funding to buy chips and build infrastructure

Its big investors include Microsoft and Japan's SoftBank

Musk has called Grok a "maximally truth-seeking" AI that is also "anti-woke," in a bid to set it apart from its rivals

But this has not come without its fair of controversy

Earlier this year, Grok responded to user queries with unrelated s the controversial topic of "white genocide" and South Africa

Musk has also clashed with fellow AI leaders, including OpenAI's Sam Altman

Most famously, Musk claimed that OpenAI, which he co-founded, has deviated from its original mission of AI to benefit humanity as a nonfit and is instead focused on commercial success

Altman swiftly rejected the offer. — CNBC's Lora Kolodny and Jonathan Vanian contributed to this report.