Elon Musk’s artificial intelligence startup, xAI, is raising more money than initially planned — bringing its total funding round to about $20 billion with a major equity investment from Nvidia Corp., according to people familiar with the matter. The financing package, which combines equity and debt, is tied to the Nvidia processors that xAI intends to deploy in Colossus 2, its largest data center based in Memphis. Bloomberg, which first reported details of the deal, noted that Nvidia’s contribution could reach as much as $2 billion in equity, underscoring the chipmaker’s growing role in accelerating its partners’ AI development efforts.
The fundraising marks a significant jump from earlier reports that placed xAI’s target at half that figure. Sources said the funding structure will include around $7.5 billion in equity and up to $12.5 billion in debt, organized through a special purpose vehicle designed to purchase Nvidia GPUs. xAI would then lease the processors for five years, enabling financiers to recover their investments while minimizing the company’s direct debt exposure. This unusual structure could become a model for other tech firms seeking to secure massive computing resources without overleveraging their balance sheets.
Nvidia declined to comment on the investment, while representatives for xAI did not respond to requests for comment. Musk, who had posted on X in September that the company was “not raising any capital right now,” appears to have shifted strategy as the global race for AI infrastructure intensifies. Apollo Global Management and Diameter Capital Partners are participating in the debt portion of the deal, while Valor Capital is leading the equity side, according to Bloomberg.
The latest raise continues a frenzy of capital inflows across the artificial intelligence industry, where companies like OpenAI, Meta Platforms, and Oracle have secured tens of billions of dollars to build massive data centers and expand computing capacity. Nvidia’s Chief Financial Officer, Colette Kress, recently emphasized that the company would use its financial strength to help accelerate the deployment of AI technologies across the sector, even as it continues stock buybacks and strategic acquisitions.
For xAI, the urgency to secure additional funding is clear. Bloomberg previously reported that the Musk-backed venture, which had already raised around $10 billion earlier this year, has been burning through roughly $1 billion each month. Musk has drawn on his wider business empire, including SpaceX, to bolster the AI firm’s financial base. Later this year, Tesla shareholders are expected to vote on whether the electric carmaker should invest in xAI as well.
As competition in the trillion-dollar AI market intensifies, Musk’s ambitions for xAI — from self-driving cars to humanoid robots — depend heavily on securing the computational backbone to power them. The partnership with Nvidia, and the scale of the new raise, signal that Musk’s AI gamble is expanding faster — and more expensively — than even his early backers anticipated.
