xAI Targets $20 Billion

Elon Musk's xAI is reportedly increasing its funding round to $20 billion, with Nvidia expected to contribute significantly. The investment aims to bolster xAI's AI infrastructure. The funding will be divided into approximately $7.5 billion in equity and $12.5 billion in debt.

The deal is structured through a special purpose vehicle (SPV) to acquire Nvidia processors, which xAI will then lease. Nvidia's equity investment could reach $2 billion. Firms like Apollo Global Management and Diameter Capital Partners are expected to participate in the debt portion, secured by the GPUs themselves. Valor Capital is reportedly leading the equity portion.

This substantial capital injection aims to accelerate xAI's AI development and allow it to compete with major players like OpenAI and Google DeepMind. The funds will support the expansion of xAI's data infrastructure, particularly the Colossus 2 data centre in Memphis.