Elon Musk’s AI startup xAI is expanding its fundraising to $20 billion, according to Bloomberg. The round includes up to $2 billion in equity investment from Nvidia Corp.
The funding plan combines about $7.5 billion in equity and as much as $12.5 billion in debt. It will be tied to Nvidia’s powerful GPUs for xAI’s new Colossus 2 data center in Memphis, Tennessee.
The financing is being managed through a special purpose vehicle (SPV) that will buy Nvidia’s chips and lease them back to xAI for five years. This setup helps Wall Street investors recover their funds while reducing risk, since the debt will be secured by the GPUs instead of the company itself.
Apollo Global Management and Diameter Capital Partners are supporting the debt portion, while Valor Capital leads the equity investment. Apollo is also taking part in both segments of the deal.
Nvidia and xAI have not commented on the funding. Musk previously said in September that xAI was “not raising any capital,” but the latest reports suggest a major shift in strategy.
NVIDIA CEO Comments on AI Investments and OpenAI Deal
NVIDIA CEO Jensen Huang expressed strong enthusiasm about Elon Musk’s AI startup XAI, confirming NVIDIA is already an investor and calling the startup’s financing “super exciting.” He emphasized NVIDIA’s ongoing interest in supporting promising AI ventures and said the company is always looking for opportunities to invest in innovative startups.
On the OpenAI deal, Huang said OpenAI does not yet have the funds but will raise capital through revenues, equity, or debt. He expressed regret that NVIDIA hadn’t invested in OpenAI earlier and noted that the partnership will prepare OpenAI for becoming a “self‑hosted hyperscaler.” Huang also highlighted OpenAI’s rapid revenue growth and clarified that NVIDIA’s investment does not require OpenAI to use it to purchase NVIDIA technology, emphasizing the goal of supporting the AI ecosystem’s growth.
The structure of this deal could become a new model for tech financing, allowing AI startups to access top-end hardware without adding heavy balance sheet debt.
