Key Takeaways
- xAI, Elon Musk’s AI startup, is raising about $20 billion in financing, backed by Nvidia and leading investment firms.
- The funding uses a special purpose vehicle (SPV) to buy Nvidia chips and lease them to xAI’s Colossus 2 data center.
- Nvidia may invest up to $2 billion in equity, deepening its financial involvement across the AI ecosystem.
- The deal reflects intensifying competition in AI infrastructure financing as chipmakers and startups expand capacity.
Elon Musk’s artificial intelligence startup xAI is seeking to raise about $20 billion in new financing, backed by Nvidia Corp and other investors, according to Bloomberg.
The round, which exceeds earlier fundraising targets, combines equity and debt through a special purpose vehicle (SPV) that will purchase Nvidia processors and lease them to xAI for use in its Colossus 2 data center in Memphis.
Nvidia is also expected to contribute up to $2 billion in the equity portion, with the overall $20 billion structure including about $7.5 billion in equity and $12.5 billion in debt, allowing investors to recover funds over five years as xAI leases the processors.
In addition to Nvidia, Apollo Global Management, Diameter Capital Partners, and Valor Capital are among the financial backers, Bloomberg reported.
Technology Giants Deepen Collaborations to Advance AI Development
In September, Nvidia announced a major collaboration with OpenAI to provide up to ten gigawatts of computing systems for training next-generation artificial intelligence models.
These partnership underscores Nvidia’s growing influence as a core infrastructure provider in the AI ecosystem, reflecting its shift from a traditional chip supplier to a broad technology enabler.
While Nvidia deepens its presence through large-scale system deployments, Advanced Micro Devices (AMD) is also expanding its role with a multi-year agreement to supply as much as six gigawatts of AMD Instinct GPUs for OpenAI’s upcoming infrastructure projects.
The deal begins with a one-gigawatt rollout of AMD’s new MI450 series chips in the second half of 2026 and extends across future generations of its technology.
Under this arrangement, AMD and OpenAI will work closely on large-scale deployments and hardware optimization, continuing a collaboration that began with AMD’s earlier MI300X and MI350X processors.
Additionally, as part of the deal, OpenAI received a warrant for up to 160 million AMD shares, which will vest as specific technical and commercial milestones are achieved.
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