Al Root

Recent activity at Elon Musk's artificial-intelligence company xAI is rekindling hope that Musk could consolidate at least some of his business interests.

Tuesday, The Wall Street Journal reported that Musk's xAI was trying to raise $12 billion to buy more of the Nvidia chips that power its AI models. It appears the capital might be raised by a third party, with the chips being leased to xAI.

That isn't an uncommon financing arrangement for many companies. It turns a capital expense into an operating expense, preserving some cash for the lessee.

xAI didn't immediately respond to a request for comment about the report.

The Tuesday report follows a recent Musk tweet about Tesla holding a shareholder vote on whether the electric-vehicle maker should invest directly in xAI. "If it was up to me, Tesla would have invested in xAI long ago," wrote Musk on July 13. "We will have a shareholder vote on the matter."

Musk posted the comment at around the same time that another Wall Street Journal report said that SpaceX was investing $2 billion in xAI. The companies didn't respond to requests for comment about that investment.

SpaceX and xAI are privately held companies controlled by Musk. There are a few takeaways for Tesla's public shareholders.

For starters, AI is expensive. It takes billions to develop useful AI applications.

Second, the lines between Musk's companies are blurring. Tesla is a car company, but according to many Wall Street analysts, most of its value is related to its AI efforts. It is currently using AI to train cars to drive themselves and to create useful humanoid robots. Musk has hinted recently that SpaceX design could be assisted by AI.

All this is fueling speculation that Musk is considering creating a larger "X" corporation that would house more of his business interests under one roof. Some investors are "hoping that he consolidates," says Rainmaker managing director Greg Martin. The hope is "that Tesla buys xAI."

Rainmaker facilitates trades in privately held companies, including SpaceX, which is valued at some $400 billion, and xAI, which is valued at about $113 billion. Tesla's market capitalization, at recent levels, is roughly $1 trillion, still Musk's most valuable company.

Any deal is probably a long way off, but Tesla shareholders would likely vote in favor of an xAI investment, as they generally side with Musk. His controversial 2018 pay package, awarding Musk some 300 million incentive-laden stock options, for instance, was approved by shareholders -- twice -- with more than 70% of the vote.

An xAI investment vote "would pass by a mile," says Wedbush analyst Dan Ives. "Tesla investors want more xAI."

Tesla stock certainly isn't being hurt by recent capital raising by, or Musk's focus on, xAI. Tesla shares were up 1% in late trading on Tuesday at $331.85, while the S&P 500 was flat and the Dow Jones Industrial Average was up 0.2%. Through late trading, Tesla stock was up about 4% in July.

Write to Al Root at allen.root@dowjones.com

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July 22, 2025 14:39 ET (18:39 GMT)

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