Elon Musk's artificial intelligence startup xAI is burning cash at an astonishing rate. Internal documents show that the company spent $7.8 billion in the first nine months of 2025, averaging about $28 million a day, while quarterly losses continue to widen. The ultimate goal is to develop an autonomous AI system that can power Tesla's humanoid robot, Optimus.
On Friday, Bloomberg reported that financial documents obtained show xAI had a net loss of $1.46 billion in the third quarter of 2025, a significant increase from the $1 billion loss in the first quarter. Although revenue nearly doubled quarter-over-quarter to $107 million, the company remains in a large-scale investment phase, building data centers, recruiting talent, and developing software.
In a recent conference call with investors, xAI executives revealed that the company's core focus is on rapidly building AI agents and other software products, which will ultimately be integrated into a pure AI software company called &#34;Macrohard&#34; and provide power support for Tesla's humanoid robot, Optimus.
xAI has just completed a $20 billion equity financing round, with investors including Nvidia, Valor Equity Partners, and the Qatar Investment Authority, bringing the company's valuation to $230 billion. This funding is expected to support the company's operations for the next year or longer, as its monthly investment spending remains controlled at under $1 billion.
<h2>Losses Widen but Revenue Grows</h2>
xAI's financial data exhibits the typical characteristics of a high-growth AI startup. Third-quarter revenue reached $107 million, nearly doubling from the previous quarter, but net losses also climbed from $1 billion in the first quarter to $1.46 billion.
The company showed signs of improvement in gross profit. Documents indicate that gross profit for the third quarter reached $63 million, up from $14 million in the previous quarter. However, for the first nine months ending in September, the company's EBITDA loss reached $2.4 billion, exceeding the previously projected annual loss target of $2.2 billion.
Despite strong revenue growth, xAI may not achieve its annual targets. In June, the company had informed investors that it hoped to reach $500 million in revenue for the year, but as of September, it had only achieved just over $200 million in sales. xAI executives expressed optimism about the company's performance during the investor call, stating that the year-end results would be positive, but specific figures have not yet been disclosed.
<h2>Betting on Optimus and the &#34;Macrohard&#34; Strategy</h2>
According to insiders, during the investor call, xAI executives, including Chief Revenue Officer Jon Shulkin, stated that the company's goal is to build an autonomous AI system that will ultimately power Tesla's humanoid robot, Optimus.
xAI's current core mission is to rapidly develop AI agents and other software products. These products will be integrated into what Musk refers to as &#34;Macrohard&#34;—a pure AI software company, a play on the name &#34;Microsoft&#34;—until they can ultimately drive the Optimus robot. Tesla's goal in developing Optimus is to replace human labor.
Company executives have informed investors that xAI has the necessary resources to continue its significant spending. Internal documents refer to the rapid growth of AI as &#34;escape velocity&#34;—a term borrowed from astrodynamics that Musk often uses to describe how quickly his companies, including SpaceX, can achieve growth.
<h2>Aggressive Financing Supports Expansion Plans</h2>
To sustain its massive expenditures, xAI Holdings—parent company of xAI and X—is focusing on raising funds. The company recently completed a $20 billion equity financing round, with investors including Nvidia, Valor Equity Partners, and the Qatar Investment Authority, bringing the company's valuation to $230 billion.
According to insiders, this cash is expected to support the company's operations for the next year or longer, as its monthly investment spending remains below $1 billion. In the nine months leading up to September 2025, xAI used nearly $8 billion in cash for investments.
xAI is simultaneously raising equity and debt funding. The company has partnered with Valor and Apollo Global Management to establish a special purpose entity to purchase Nvidia chips and expects to finalize more deals soon to continue expanding the Colossus data center in Memphis, Tennessee. The company is planning an expansion of the Memphis campus and recently purchased a third building in the area, which Musk stated late last year would increase the company's computing capacity to nearly 2 gigawatts.
To date, xAI has raised at least $40 billion in equity funding, including the latest $20 billion financing announced earlier this month. As of September, the company has paid nearly $160 million in equity compensation, reflecting the intensifying competition for AI talent.
<h2>Management Restructuring and Business Integration</h2>
xAI has recently undergone a management restructuring. Former Morgan Stanley banker Anthony Armstrong joined xAI and X as CFO last fall, while Valor Equity partner Jon Shulkin also took on a new role at xAI late last year. xAI's former CFO Mike Liberatore resigned just three months into his tenure last fall.
Although Musk manages multiple independent businesses and projects, he often intertwines their goals and resources. xAI's chatbot Grok is fully integrated into the social network X and is also available in Tesla vehicles. SpaceX has invested in xAI, while xAI has spent hundreds of millions on Tesla's Megapack batteries.
Despite Musk discussing the potential benefits of formally connecting xAI and Tesla, the automaker is currently not an investor in xAI. Tesla shareholders voted last November on whether the company should invest in xAI—a proposal supported by Musk—but this non-binding proposal did not receive enough votes to pass. Tesla's General Counsel Brandon Ehrhart stated at the time that the company's board was considering the next steps

TSLA

Internal documents show that the company's cash expenditures reached as high as $7.8 billion in the first 9 months, with an average daily consumption of about $28 million. Despite a doubling of revenue in Q3, net losses widened to $1.46 billion. In the face of massive investments, management revealed the ultimate strategy: to create a software ecosystem named "Macrohard," ultimately to build a "brain" for Tesla's humanoid robot Optimus

- xAI is rapidly consuming cash, spending $7.8 billion in the first nine months of 2025, with a net loss of $1.46 billion in Q3, despite nearly doubling revenue to $107 million.  
- The company's strategy focuses on developing AI systems for Tesla's humanoid robot, Optimus, and recently completed $20 billion in equity financing to support future operations.  
- While revenue is growing, xAI faces challenges in meeting annual revenue goals, having only reached $200 million of the targeted $500 million by September.

Burning $28 million a day! xAI financial documents leaked: $7.8 billion "burned" in 9 months betting on humanoid robots