Summary by Bloomberg AI
- Elon Musk’s artificial intelligence startup xAI is raising more financing than initially planned, tapping backers including Nvidia Corp. to lift its ongoing funding round to $20 billion.
- The financing includes equity and debt in a special purpose vehicle that will buy Nvidia processors and rent them to xAI for use in its Colossus 2 project.
- Nvidia is investing as much as $2 billion in the equity portion of the asset backed transaction, a strategy by the chipmaker that helps accelerate its customers’ AI investments.
By Carmen Arroyo and Ed Ludlow
10/08/2025 06:47:30 [BN]
(Bloomberg) — Elon Musk’s artificial intelligence startup xAI is raising more financing than initially planned, tapping backers including Nvidia Corp. to lift its ongoing funding round to $20 billion, according to people with knowledge of the matter.
The financing includes equity and debt in a special purpose vehicle that will buy Nvidia processors and rent them to xAI for use in its Colossus 2 project, said the people, who asked not to be identified because the information is private. That’s the name of its largest data center site, which is located in Memphis.
Nvidia is investing as much as $2 billion in the equity portion of the asset backed transaction, the people said, a strategy by the chipmaker that helps accelerate its customers’ AI investments. XAI’s fundraising effort, previously reported by Bloomberg at half the amount, may continue to grow.
In an interview with CNBC Wednesday, Nvidia’s CEO Jensen Huang said when asked about Bloomberg’s reporting that the only regret he has about xAI and Musk is that he “didn’t give him more money.”
“Almost everything that Elon’s part of, you really want to be part of as well,” Huang said. “He gave us the opportunity to invest in xAI, and I’m just delighted by that.”
A representative for Nvidia declined to comment. A spokesperson for xAI didn’t respond to a request for comment. Musk posted on X in September that the company was “not raising any capital right now.”
The massive financing is just the latest for the AI industry, which has seen major tech companies invest tens of billions at a frenetic pace in order to build the infrastructure necessary to develop top AI models. Earlier this week, OpenAI announced a deal to use Advanced Micro Devices Inc. chips over multiple years.
Meta Platforms Inc. has inked several multibillion-dollar deals in the past few months, including a $29 billion financing package for data centers. Oracle Corp. also raised a $38 billion debt package for its infrastructure.
XAI’s financing would be split between about $7.5 billion of equity and as much as $12.5 billion of debt in the SPV, the people said. The vehicle will be used to buy Nvidia processors, and Musk’s artificial intelligence startup would then rent the chips out for five years, allowing Wall Street financiers to recoup their investment.
The unique deal structure, backed by the GPUs as opposed to the company, could provide a playbook for tech firms looking to decrease debt exposure.
Nvidia’s leaders have said they will use the company’s growing financial strength to speed up the deployment of artificial intelligence across the industry.
In September, Chief Financial Officer Colette Kress told the audience at a Goldman Sachs conference that Nvidia will repurchase stock and do strategic acquisitions where possible, but the priority is on using cash to help other companies use AI more quickly.
Apollo Global Management is participating in the debt raise, as is Diameter Capital Partners, the people said. Valor Capital is leading the equity portion of the deal, Bloomberg previously reported. Apollo is also investing.
A Diameter spokesperson declined to comment, while representatives for Apollo and Valor didn’t respond to requests for comment.
Data center capacity is seen as a necessity for developing top AI models, though some have debated how much the computing power can improve the technology.
In the US bond markets alone, tech companies have raised about $157 billion this year — up 70% from last year.
Musk’s xAI is especially eager for capital. The firm, which already raised about $10 billion of corporate equity and debt earlier this year, still needs billions more given the company has been burning through $1 billion per month, Bloomberg reported.
Musk has also tapped his empire of companies, including SpaceX, for investment into xAI. Later this year, Tesla Inc. investors will vote on whether the electric carmaker should invest in xAI as well.
Musk has framed AI as the foundation for many of his futuristic products, including self-driving cars and fully autonomous robots.