Tesla Commits $2 Billion to xAI, Deepening Musk's AI Push

4 articles · Updated · 24/7 Wall St. · May 24

$2 billion of Tesla capital is going into xAI Series E preferred stock under a new AI collaboration framework, making the automaker the clearest public-market proxy for Elon Musk's AI venture.
Tesla's latest results help explain the move: Q1 FY2026 revenue rose 16% to $22.39 billion, non-GAAP EPS was $0.41, and R&D spending reached $1.95 billion across FSD, Dojo 3, AI5 chips, Optimus and Grok integration.
Shares closed at $426.01 on Friday, up 10% over the past month but still down 5% year to date, while prediction markets put only 4% odds on a Tesla-xAI merger by June 30.
The deal sharpens Musk's challenge to OpenAI and its backers, especially Microsoft, whose AI business is running at a $37 billion annual revenue pace as Amazon and Alphabet also ramp spending on AI infrastructure.

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