Elon Musk's xAI has raised a total of $10 billion in debt and equity, partly to fund the development of more data center capacity.

Revealed in a post to X by Morgan Stanley, the funding is comprised of $5bn in secured notes and term loans, along with $5bn in "strategy equity investment."

The debt funding round, according to Morgan Stanley, was "oversubscribed and included prominent global debt investors."

The post added: "The combination of debt and equity reduces the overall cost of capital and substantially expands pools of capital available to xAI. The proceeds will support xAI’s continued development of cutting-edge AI solutions, including one of the world's largest data centers and its flagship Grok platform."

xAI operates a data center in Memphis, Tennessee. The facility was launched in July 2024, with an initial capacity of 150MW. However, last October, it was reported that the capacity at the data center was set to double, following the installation of an additional 100,000 Nvidia Hopper GPUs to the cluster. It is located on an industrial park at Paul Lowry Road, in southwest Memphis.

The company is facing a lawsuit at the site as a result of the increase in power capacity, for which the company allegedly did not obtain the necessary permits to legally operate the 26 natural gas turbines that were installed on the site to power its operations.

A second data center in Memphis is also in the works following the purchase of a one million sq ft (92,903 sqm) site on Tulane Road.

It is unclear which - if either - data center Morgan Stanley refers to in its post stating the investment will be used to develop "one of the world's largest data centers." DCD has contacted xAI for more information.

According to a report from Reuters, xAI has also been in talks to raise around $20bn in equity, which would value the company between $120bn and $200bn.

xAI was recently revealed to be using Oracle's compute capacity to train its next-generation Grok models and to run inference workloads.