Daijiworld Media Network – San Francisco

San Francisco, Oct 8: Elon Musk’s artificial intelligence startup XAI is raising $20 billion in fresh financing — double its earlier target — as it secures a major investment from Nvidia Corp. to fuel its ambitious ‘Colossus 2’ data centre project in Memphis, according to reports.

The latest funding round will be structured as a mix of $7.5 billion in equity and up to $12.5 billion in debt through a special purpose vehicle (SPV). The SPV will purchase Nvidia’s high-performance processors and rent them to XAI for a five-year period, allowing financiers to recoup their investment by leveraging the value of the GPUs rather than XAI’s balance sheet.

Nvidia, the world’s leading AI chipmaker, is said to be investing as much as $2 billion in the equity portion of the deal — a move aimed at accelerating the adoption of its chips across the AI sector. Apollo Global Management and Diameter Capital Partners are participating in the debt portion, while Valor Capital is leading the equity round.

A representative for Nvidia declined to comment on the transaction, and xAI has not issued an official statement. However, the fundraising underscores the growing capital intensity of the AI race, where tech giants are pouring tens of billions into data centres and chips to develop advanced AI models.

Musk’s xAI, which has already raised about $10 billion in equity and debt earlier this year, reportedly burns through nearly $1 billion a month to finance its operations. The firm has also tapped into Musk’s other ventures — including SpaceX — for investments, and later this year, Tesla shareholders will vote on whether to invest in XAI as well.

The ‘Colossus 2’ facility in Memphis is XAI’s largest data centre project to date and is expected to host cutting-edge AI infrastructure critical for training next-generation models.

The move comes as rivals like OpenAI, Meta Platforms, and Oracle Corp. also secure massive capital infusions to expand computing capacity. This week alone, OpenAI signed a multi-year chip supply deal with AMD, while Meta recently announced a $29 billion financing package for data centres, and Oracle raised $38 billion in debt for infrastructure growth.

Nvidia’s Chief Financial Officer, Colette Kress, had earlier stated that the company plans to use its financial strength to “speed up the deployment of AI across the industry,” prioritising strategic investments over stock buybacks.

For Musk, AI remains central to his vision for self-driving cars, autonomous robots, and futuristic products, and the XAI funding surge highlights the intense race among tech leaders to build the computing backbone needed for tomorrow’s AI-powered technologies.