Elon Musk’s AI startup xAI is raising more cash than originally planned, pulling in heavy hitters like NVIDIA to push its ongoing funding round to $20 billion, according to sources familiar with the deal reported by Bloomberg. The financing mixes equity and debt through a special purpose vehicle (SPV) that will purchase NVIDIA processors and lease them to xAI for its Colossus 2 project in Memphis. NVIDIA is chipping in up to $2 billion in equity, a smart move to speed up customer AI builds.
NVIDIA reps didn’t comment, and xAI’s spokesperson hasn’t responded to Bloomberg’s inquiries. Musk tweeted in September that xAI wasn’t raising capital right now, but that was before this round gained steam.
The funding breaks down to about $7.5 billion in equity and up to $12.5 billion in debt via the SPV. It’ll fund buying NVIDIA chips, which xAI will rent for five years, letting investors recoup their money. This hardware-backed structure could help tech firms limit debt risks.
It’s the latest in AI’s funding frenzy. Earlier this week, OpenAI inked a multi-year deal for AMD chips, building on its September announcement for at least 10 gigawatts of NVIDIA systems. Meta and Oracle have also secured multibillion-dollar deals for data centers, with Oracle raising $38 billion in debt.
What do you think about this huge xAI raise? I’d love to hear your thoughts!
Source: Bloomberg
