Elon Musk's AI company xAI has raised $10 billion in debt and equity, as the competition to take the lead in the AI race continues to get intense every second.

xAI has raised $5 billion in debt and $5 billion in a separate strategic equity transaction, said financial major Morgan Stanley in a post on X.

"The combination of debt and equity reduces the overall cost of capital and substantially expands pools of capital available to xAI," it said.

The fresh capital will help xAI to develop its AI solutions including one of the world's largest data center and its flagship Grok platform, it added.

In an X post on June 27, Musk had said that xAI Grok 4, the latest version of its AI chatbot, will be released shortly after July 4.

The release of Grok 4 will come soon after xAI unveiled Grok 3 in February, even as Grok 3 was slated to release last year itself.

Grok is Musk's answer to rival OpenAI's GPT-4o and Google's Gemini.

Earlier in March, xAI had also acquired X (formerly Twitter) in a move to make the integration of Grok on the social media platform easier.

Prior to this fundraise, xAI raised $6 billion in Series C round in December last year from investors including Andreessen Horowitz , Blackrock, Fidelity, Lightspeed, MGX, Morgan Stanley, OIA, QIA, Sequoia Capital, Valor Equity Partners, Vy Capital, Nvidia, AMD and Kingdom Holdings, a Saudi conglomerate.

xAI's latest fundraise comes amid cut throat competition between tech giants to stay ahead in the AI race.

Following Meta's big acquisition of data labeling company of Scale AI last month and its decision to restructure its AI unit under 'Superintelligence Labs', the Mark  Zuckerberg led company has been reportedly paying hefty compensation to poach AI researchers from rival companies.