Nvidia to fund Musk's xAI chips in $20 billion deal
Elon Musk's AI startup xAI is raising more funding than originally planned, with investors including Nvidia Corp. helping bring its current funding round to $20 billion.
Elon Musk's AI startup xAI is raising more funding than originally planned, with investors including Nvidia Corp. helping bring its current funding round to $20 billion.
According to sources who spoke on condition of anonymity, the financing includes equity and debt in an SPV (special purpose vehicle) that will purchase Nvidia processors and lease them to xAI for the Colossus 2 project. This is the name of xAI's largest data center, located in Memphis, writes Bloomberg.
The sources said the xAI financing involves about $7.5 billion in equity and up to $12.5 billion in debt in an SPV to buy Nvidia processors, which Musk’s startup would then lease for five years. This would allow Wall Street financiers to recoup their investment. The unusual arrangement, where GPUs are collateral rather than the company itself, could become a template for tech companies looking to reduce their debt.
Musk’s xAI company is in dire need of funding. According to Bloomberg, despite raising about $10 billion in equity and debt financing earlier this year, the startup still needs billions as it spends $1 billion a month. In addition, Musk has already brought in his business empire, including SpaceX, to invest in xAI.
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