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Elon Musk’s artificial intelligence startup xAI reported a sharp jump in quarterly losses as it expanded computing capacity. Reports citing internal financial documents put xAI’s net loss at $1.46 billion for the quarter ended September 30, 2025.
The same documents showed a $1 billion loss in the prior quarter, as spending rose faster than sales. xAI also used large sums to build data centers and hire staff.
Internal figures said xAI spent $7.8 billion in cash during the first nine months of 2025. The outlays covered servers, power equipment, real estate, and engineering teams.
Documents described rapid scaling as an “escape velocity” push toward larger models and agent tools. The company also discussed software that could support humanoid robots over time. Meanwhile, executives signaled resources for continued heavy investment through 2026 globally.
AI startups often face high upfront costs, especially for high-end GPUs and networking gear. However, the scale of xAI’s spending showed an aggressive build schedule.
The documents also reported stock-based compensation of nearly $160 million through September. That figure reflected intense competition for AI researchers and product leaders.
Management changes also continued during the year, according to people familiar with the company. The reports said a new chief financial officer joined in the fall.
The same internal documents put xAI revenue at $107 million for the September quarter. The figure nearly doubled from the prior quarter.
Gross profit also rose to $63 million in the quarter, up from $14 million previously, based on the documents. Consequently, margins improved as usage expanded.
Even with a stronger gross profit, operating costs still dominated results. The documents showed negative EBITDA of $2.4 billion through September. That compares with an earlier full-year target of a $2.2 billion loss.
xAI did not publicly release the underlying statements tied to the figures in the reports. When asked for comment by one outlet, xAI responded with the message, “Legacy Media Lies.”
Earlier this week, xAI announced a $20 billion Series E round, exceeding a previously signaled $15 billion target. The company said it will use the funding to scale models and infrastructure.
xAI listed investors that include Valor Equity Partners, Stepstone, Fidelity, Qatar Investment Authority, MGX, and Baron Capital Group. Additionally, the company framed the raise as support for faster product releases.
Separately, Mississippi officials said xAI plans to invest more than $20 billion in a Southaven data center project named “MACROHARDER.” The state said the site should begin operations in February 2026.
Officials said the facility will lift xAI computing capacity to about 2 gigawatts, with proximity to major power resources. Moreover, they described the project as the largest private investment in state history.
The Southaven build also drew scrutiny from local groups over pollution and public health concerns. State leaders said the project will follow environmental commitments tied to the permit process.
xAI continues to link its AI work to broader software ambitions, including agent-style products and robotics use cases. The company also distributes its Grok chatbot through X and in Tesla vehicles, which expands reach for its AI services.
