Elon Musk’s artificial intelligence startup xAI suffered a sharp quarterly loss as it pumped capital into ambitious long-term projects including software and infrastructure aimed at one day powering humanoid robots like Tesla Inc.’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 approximately $1 billion in the prior quarter. Sales for the period were approximately $107 million, nearly double the previous quarter.
xAI leaders explained to investors that the company is building AI with the ability to operate autonomously, eventually producing humanoid robots like Tesla’s robot Optimus that are meant to perform tasks normally performed by humans.
In addition to AI agents and other software products, the startup is focused on projects Musk calls “macrohard,” an AI-specific software company aimed at eventually supporting the Optimus robot. xAI has the capital to continue spending aggressively despite these losses. The company described its rapid growth in AI as “escape velocity,” a term Musk often uses to describe how quickly his company can scale.
xAI expands profits on the back of large investments
xAI’s revenue increased to $107 million in the three months ended September 30, 2025, more than double the year-ago period. gross profit Similarly, sales have increased from $14 million to $63 million, showing that this company is now generating revenue for all the efforts it has made so far.
At the same time, xAI is still suffering heavy losses. Earnings before interest, taxes, depreciation and amortization fell to -$2.4 billion through September, exceeding the company’s initial full-year forecast of $2.2 billion.
This loss reflects aggressive spending on talent and infrastructure, particularly to support AI software development. This is a common strategy for fast-growing startups focused on rapidly scaling and securing market share.
xAI’s senior management team expects revenue growth to remain on target. But even if it misses its original projected annual revenue goal of $500 million, it provides reassurance that the company is still “on track” to meet its overall goals. By September, xAI’s sales exceeded $200 million.
xAI raises billions of dollars, deepening bonds in mask ecosystem
xAI is part of xAI Holdings, which also owns X, formerly Twitter. The company completed a $20 billion equity round, giving it a valuation of $230 billion. Investors include: NvidiaValor Equity Partners, and Qatar Investment Authority. xAI spends nearly $1 billion a month on operations and investments, so this funding is likely to support the company for more than a year.
Musk’s businesses frequently share strategic goals and resources. xAI’s Grok chatbot is integrated into X and Tesla vehicles, while SpaceX has acquired a stake in xAI and is spending hundreds of millions of dollars on batteries for the Tesla MegaPack. The company is also building a Colossus data center in Memphis, Tennessee, which is expected to boost xAI’s computing power to nearly 2 gigawatts.
xAI also saw changes at the top. former morgan stanley Banker Anthony Armstrong was named chief financial officer in the fall, and Valor Equity partner John Shulkin has taken up a new role at the firm. Former CFO Mike Liberatore resigned after just three months on the job.
The company has now raised at least $40 billion in equity and spent nearly $160 million in stock-based compensation through September, illustrating the intense competition for AI talent.
Although the losses are still high, Musk and xAI remain focused on continued growth, with the ultimate goal of designing AI systems that essentially power robots and software platforms that could transform entire new industries.
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