xAI scales revenue amid heavy investment

Elon Musk’s artificial intelligence startup xAI posted a significantly wider quarterly loss as it pours capital into ambitious long-term projects, including software and infrastructure meant to one day power humanoid robots like Tesla’s Optimus.

According to internal financial documents, xAI reported a net loss of approximately $1.46 billion for the quarter ended September 30, 2025, up from a net loss of roughly $1 billion in the prior quarter. Revenue for the period nearly doubled sequentially to about $107 million.

xAI leaders explained to investors that the company was building AI with the ability to work autonomously — and eventually generate humanoid robots, such as Optimus, Tesla’s robot intended to perform tasks typically executed by humans. 

In addition to AI agents and other software products, the startup is focusing on a project that Musk calls “Macrohard,” an AI-only software company that is intended to support the Optimus robot ultimately. xAI does have the funds to continue spending aggressively despite these losses. The company described the rapid growth of AI as “escape velocity,” a term Musk frequently uses to describe how quickly his companies can scale.

xAI scales revenue amid heavy investment

xAI’s sales rose to $107 million for the three months ending September 30, 2025, more than two times from a year earlier, and gross profit likewise went up to $63 million from $14 million, showing that for all the work this company has done, it is now bringing in revenue. 

At the same time, xAI is still racking up steep losses. Earnings before interest, taxes, depreciation, and amortisation fell to negative $2.4 billion through September, exceeding the company’s earlier full-year projection of $2.2 billion.

The losses reflect aggressive spending on talent and infrastructure, particularly to support AI software development—a common strategy among fast-growing startups focused on scaling quickly and securing market share.

xAI senior management expects revenue growth to stay on target. However, it provides reassurance that the company is still ‘on track’ to meet its overall targets even if its initial projected annual revenue target of $500 million is not met. By September, xAI had over $200 million in sales.

xAI raises billions and deepens Musk ecosystem ties

xAI belongs to xAI Holdings, which also owns X, formerly Twitter. The company just completed a $20 billion equity round, bringing its valuation to $230 billion. Investors include Nvidia, Valour Equity Partners, and the Qatar Investment Authority. Since xAI is spending nearly $1 billion per month on operations and investments, the funds are likely to support the company for the next year or longer. 

Musk’s businesses frequently share strategic goals and resources. xAI’s Grok chatbot is integrated with X and Tesla vehicles, while SpaceX has taken a stake in xAI, which in turn has spent hundreds of millions of dollars on Tesla Megapack batteries. The company is also building its Colossus data centre in Memphis, Tennessee, a facility that is expected to lift xAI’s computing capacity to nearly 2 gigawatts.

xAI has also seen changes at the top. Former Morgan Stanley banker Anthony Armstrong was appointed chief financial officer in the autumn, while Jon Shulkin, a partner at Valour Equity, took on a new role at the company. The previous CFO, Mike Liberatore, stepped down after just three months in the position.

The company has now raised at least $40 billion in equity and spent nearly $160 million on stock-based compensation through September, indicating strong competition for AI talent. 

Although losses remain high, Musk and xAI remain committed to ongoing growth, with the ultimate goal, essentially, to design AI systems that power robots and software platforms, which could upend entire new industries.

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