xAI burned $6.4B last year. SpaceX’s IPO filing shows why the spending is far from over

Elon Musk’s artificial intelligence venture, xAI, reported staggering operational losses of $6.4 billion against revenues of just $3.2 billion for 2025, as outlined in the recent SpaceX IPO documents. The financial outlook suggests that these losses are likely to escalate further. The IPO filing indicates SpaceX's plans to significantly enhance its AI model Grok, aiming to expand it to "multiple trillions of parameters." This monumental increase is expected to necessitate a substantial rise in computational expenditure. In February, Musk merged xAI with SpaceX, which had previously acquired the social media platform X (formerly known as Twitter), and announced intentions to take the unified entity public in 2023. While competitors like OpenAI and Anthropic have their sights set on public offerings in the coming years, SpaceX’s IPO is anticipated to be one of the largest ever, potentially reaching a valuation of $1.75 trillion. This IPO marks the first time that xAI's financial state has been publicly revealed. In 2024, xAI had already recorded a loss of $1.56 billion on revenues of $2.62 billion, and by 2025, the financial gap widened dramatically. In contrast, competitor Anthropic is projected to see a revenue surge of 130%, reaching $10.9 billion in the second quarter, which will yield its first operating profit. This revenue growth from 2024 to 2025 largely stems from sales in AI solutions and infrastructure, totaling $465 million, which includes $365 million from subscriptions to X and Grok, as well as $88 million from data licensing. Additionally, $116 million came from advertising, showcasing a diverse income stream. Capital expenditures in the AI segment have surged from $12.7 billion in 2025 to an impressive $7.7 billion in the first quarter of 2026 alone, indicating an annualized rate of approximately $30.8 billion, more than double year-over-year. Despite these investments, user engagement remains limited; the filing reveals that SpaceX had 117 million monthly active users for Grok AI features as of March 2026, out of a total of 550 million across both Grok and X, showing that only 20% of the ecosystem actively utilizes Grok's AI capabilities. Nonetheless, SpaceX is committed to advancing Grok, aiming for a next-generation AI that will significantly enhance reasoning depth and overall intelligence. This ambitious goal is now officially documented in the SEC filings and will require further investment. The "use of proceeds" section in the filing highlights the need for an expansion of AI compute infrastructure. The xAI data centers, Colossus and Colossus II, which were established in record times of 122 days and 91 days respectively, currently provide about 1 gigawatt of computing power. These centers are integral for the training and inference processes of Grok’s AI. SpaceX emphasizes that possessing its own compute resources and vertically integrating its AI stack allows for more cost-effective and rapid training of advanced models. To alleviate investor concerns regarding expenditures, SpaceX has plans to utilize orbital data centers for training and inference, which Musk claims will be a more economical solution than traditional terrestrial facilities. However, this futuristic approach is not anticipated to materialize for several years, with the earliest deployment of orbital AI compute satellites expected around 2028. As stated in the filing, "The future of AI will be determined by control of the physical stack."