Daijiworld Media Network – San Francisco
San Francisco, Jan 7: Elon Musk’s artificial intelligence venture xAI has successfully closed a massive $20 billion funding round, drawing investments from global heavyweights including Nvidia Corp., Valor Equity Partners and the Qatar Investment Authority.
The funding, which had been in the works for several months, will be utilised to rapidly scale xAI’s infrastructure, accelerate the development of advanced AI products and support cutting-edge research aligned with the company’s core mission of “understanding the universe,” xAI said in a statement.
Apart from Nvidia, the investor list includes Stepstone Group, Fidelity Management & Research Co., MGX, Baron Capital Group and Cisco Systems Inc.’s investment arm as a strategic participant. The company did not disclose the individual investment amounts or clarify the equity-debt split in the round.
According to sources familiar with the matter, the financing was structured with around $7.5 billion in equity and up to $12.5 billion in debt through a special purpose vehicle. The vehicle is expected to purchase Nvidia’s advanced GPUs, which xAI plans to lease out over a five-year period, enabling financiers to recover their investments. Industry observers note that this asset-backed structure could serve as a model for tech firms seeking to limit direct debt exposure.
xAI has emerged as one of the most capital-intensive players in the AI race, reportedly burning nearly $1 billion per month. Despite raising around $10 billion earlier in 2025 through equity and debt, the company continues to seek significant funding to sustain its rapid expansion.
Musk has also announced plans to further expand xAI’s massive data centre complex in Memphis by acquiring a third building, which would take the company’s AI computing capacity close to 2 gigawatts. Access to large-scale data centre infrastructure is widely viewed as critical for developing next-generation AI models.
The billionaire has additionally explored funding support from his other ventures. Tesla shareholders recently voted on a proposal to invest in xAI. While the proposal received more votes in favour than against, a notable number of shareholders abstained. Tesla’s board is expected to deliberate on the next steps, though the vote itself was non-binding. Musk has previously suggested a potential $5 billion investment from Tesla.
In its announcement, xAI also highlighted the growing reach of its AI chatbot Grok, which is integrated with social media platform X. However, Grok has recently drawn scrutiny from regulators after concerns were raised over the misuse of AI-generated images, including instances involving non-consensual and sensitive content.
With this latest funding boost, xAI is positioning itself as a major contender in the global AI landscape, intensifying competition among technology giants racing to dominate the next wave of artificial intelligence.