Elon Musk's xAI Seeks $12 Billion for Massive AI Infrastructure Expansion
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5 Sources
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Musk's xAI working to raise up to $12 billion, WSJ reports
July 22 (Reuters) - Elon Musk's artificial intelligence startup xAI is working with a financier to secure up to $12 billion more for its expansion plans, the Wall Street Journal reported on Tuesday, citing people familiar with the situation. Valor Equity Partners, an investment firm whose founder, Antonio Gracias, has close ties to Musk, is in talks with lenders to raise the capital, according to the report. The money would be used to buy a massive supply of advanced Nvidia (NVDA.O), opens new tab chips that would be leased to xAI for a new massive data center meant to help train and power AI chatbot Grok, the WSJ reported. XAI and Valor Equity Partners did not immediately respond to Reuters' requests for comment. Reporting by Jaspreet Singh in Bengaluru; Editing by Anil D'Silva Our Standards: The Thomson Reuters Trust Principles., opens new tab
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Musk's xAI to raise up to $12 billion in debt for AI expansion, WSJ reports
July 22 (Reuters) - Elon Musk's artificial intelligence startup xAI is working with a financier to secure up to $12 billion more for its expansion plans, the Wall Street Journal reported on Tuesday, citing people familiar with the situation. Valor Equity Partners, an investment firm whose founder, Antonio Gracias, has close ties to Musk, is in talks with lenders to raise the capital, according to the report. The money would be used to buy a massive supply of advanced Nvidia (NVDA.O), opens new tab chips that would be leased to xAI for a new huge data center meant to help train and power its AI chatbot Grok, the WSJ reported. Valor and xAI did not immediately respond to Reuters' requests for comment. Some lenders want the debt to be repaid within three years and to cap the amount of money borrowed in order to limit their risk, the report said. Training and deploying advanced AI systems is expensive, requiring costly hardware, intensive compute and skilled engineers in a highly competitive market where rivals such as OpenAI, Google and China's DeepSeek are trying to dominate the technology. XAI is training Grok on 230,000 graphics processing units, including Nvidia's 30,000 GB200 AI chips, in a supercluster, with inference handled by the cloud providers, Musk said in a post on X on Tuesday. He added that another supercluster will soon launch with an initial batch of 550,000 GB200 and GB300 chips. The AI startup was expected to burn through about $13 billion over the course of 2025, according to media reports. Earlier this month, the Financial Times reported that xAI was in talks to raise more money in a deal that could value the AI startup between $170 billion and $200 billion. In response, Musk had said xAI was not seeking funding. "We have plenty of capital." Reporting by Jaspreet Singh in Bengaluru; Editing by Anil D'Silva and Alan Barona Our Standards: The Thomson Reuters Trust Principles., opens new tab
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Musk raises $12 billion for xAI's new data center
Elon Musk is raising more funds for his artificial intelligence startup, which is already burning through cash. This time, he needs up to $12 billion to build another massive data center. Musk's latest venture, xAI, which is best known for its chatbot Grok, has raised at least $20 billion so far in equity, venture capital, corporate debt, and sales of stock and debt. Included in that funding was a $2 billion investment from his own company SpaceX. Last year, xAI built Colossus, its first giant data center in Memphis, Tennessee. It currently houses 200,000 graphics processing units, or GPUs, making it one of the world's largest clusters of AI chips. Now Musk is turning to private-equity investors like Valor Equity Partners to raise $12 billion for its second data center, Colossus 2, the Wall Street Journal reported. Valor has a history investing in Musk-owned companies like SpaceX, Tesla, and the Boring Company. Musk hasn't had trouble raising funds from big hitters in the past. Some of xAI's high profile investors include Andreessen Horowitz, Sequoia Capital, and Nvidia. While xAI last fundraised at a $75 billion valuation, per Bloomberg, it is far from profitable and generates little revenue. The startup was projected to burn through about $13 billion in cash in 2025, according to projections shared with potential creditors, the Journal reported. Much like his AI chatbot, Musk's data center has been shrouded in controversy. In April, a coalition of environmental groups released a report claiming that xAI was running more than double the number of gas turbines than it had applied for, WREG Memphis reported. Memphis Mayor Paul Young told the news organization that the additional turbines were not being used, per his conversations with xAI leadership. Earlier this month, the environmental groups joined forces with civil rights group NAACP and filed a permit appeal to stop xAI from using gas-burning turbines to power its data center, NBC reported.
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Musk's xAI working to raise up to $12 billion, WSJ reports - The Economic Times
Valor Equity Partners, an investment firm whose founder, Antonio Gracias, has close ties to Musk, is in talks with lenders to raise the capital, according to the report.Elon Musk's artificial intelligence startup xAI is working with a financier to secure up to $12 billion more for its expansion plans, the Wall Street Journal reported on Tuesday, citing people familiar with the situation. Valor Equity Partners, an investment firm whose founder, Antonio Gracias, has close ties to Musk, is in talks with lenders to raise the capital, according to the report. The money would be used to buy a massive supply of advanced Nvidia chips that would be leased to xAI for a new massive data center meant to help train and power AI chatbot Grok, the WSJ reported. XAI and Valor Equity Partners did not immediately respond to Reuters' requests for comment.
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Elon Musk's xAI Plans To Raise $12 Billion In Debt To Buy Nvidia Chips And Build One Of The World's Largest AI Superclusters: Report - Alphabet (NASDAQ:GOOG), Alphabet (NASDAQ:GOOGL)
Elon Musk's artificial intelligence startup xAI is reportedly seeking to raise up to $12 billion in debt to fund a massive AI supercomputing infrastructure powered by Nvidia Corporation's NVDA chips. What Happened: xAI is working with Valor Equity Partners to line up financing from lenders, with the capital earmarked for purchasing high-end Nvidia GPUs, reported the Wall Street Journal, citing people familiar with the situation. The chips would be leased back to xAI to support its AI chatbot Grok and broader large language model training efforts. On Tuesday, Musk posted on X, formerly Twitter, that xAI is currently training Grok on 230,000 GPUs, including 30,000 Nvidia GB200 AI chips. He also revealed that a new supercluster with 550,000 GB200 and GB300 chips will soon be operational. See Also: Opendoor Stock Frenzy Continues -- Is $40 Per Share The Next Stop? In another post, he outlined xAI's plan to deploy 50 million units of H100-equivalent AI compute within five years. Why It's Important: Earlier this month, it was announced that Musk's xAI has raised $10 billion -- $5 billion in debt and $5 billion in strategic equity -- to expand its AI infrastructure. Trending Investment OpportunitiesAdvertisementArrivedBuy shares of homes and vacation rentals for as little as $100. Get StartedWiserAdvisorGet matched with a trusted, local financial advisor for free.Get StartedPoint.comTap into your home's equity to consolidate debt or fund a renovation.Get StartedRobinhoodMove your 401k to Robinhood and get a 3% match on deposits.Get Started The latest funding talks come just weeks after the Financial Times reported xAI was exploring a new equity round that could value the company between $170 billion and $200 billion. At the time, Musk said xAI was not seeking capital, asserting, "We have plenty of capital." However, sources told WSJ the new financing may include lender-imposed conditions such as repayment within three years and borrowing caps to limit risk. xAI's ambitious plans signal intensifying competition in the global AI arms race, where rivals like OpenAI, Alphabet Inc.'s GOOG GOOGL Google and China's DeepSeek are also scaling up infrastructure. According to Benzinga's Edge Stock Rankings, Nvidia maintains strong upward momentum across short, medium and long-term timeframes. Additional performance details can be found here. Read Next: Nvidia's CEO Hits Beijing Like A Rockstar, Stirs Jensen-Mania In China Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors. Photo courtesy: JRdes / Shutterstock.com GOOGAlphabet Inc$192.690.81%Stock Score Locked: Edge Members Only Benzinga Rankings give you vital metrics on any stock - anytime. Unlock RankingsEdge RankingsMomentum43.87Growth87.12Quality87.21Value50.79Price TrendShortMediumLongOverviewGOOGLAlphabet Inc$191.850.92%NVDANVIDIA Corp$167.77-2.11%Market News and Data brought to you by Benzinga APIs
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Elon Musk's AI startup xAI is working to secure up to $12 billion in funding to expand its AI infrastructure, including purchasing advanced Nvidia chips for a new data center to power its AI chatbot Grok.
xAI's Ambitious Funding Plans
Elon Musk's artificial intelligence startup, xAI, is reportedly working to secure up to $12 billion in additional funding for its ambitious expansion plans 12. The company is collaborating with Valor Equity Partners, an investment firm with close ties to Musk, to raise this capital through debt financing 124.
Source: Benzinga
Intended Use of Funds
The primary purpose of this substantial funding is to acquire a massive supply of advanced Nvidia chips, which would be leased to xAI for a new, expansive data center 12. This infrastructure is intended to enhance the training and powering of xAI's AI chatbot, Grok 12. Musk has revealed that xAI is currently training Grok on 230,000 GPUs, including 30,000 Nvidia GB200 AI chips 5.
xAI's Supercomputing Ambitions
Musk has outlined xAI's plans to significantly scale up its AI computing capabilities. He announced that a new supercluster with 550,000 GB200 and GB300 chips will soon be operational 5. Furthermore, xAI aims to deploy 50 million units of H100-equivalent AI compute within the next five years 5. This massive expansion in computing power positions xAI as a formidable player in the AI arms race.
Financial Context and Market Position
xAI has already raised substantial funds, with at least $20 billion secured through various means, including a $2 billion investment from Musk's company SpaceX 3. The startup was last valued at $75 billion, according to Bloomberg 3. However, it's worth noting that xAI is currently far from profitable and generates little revenue, with projections suggesting it could burn through about $13 billion in cash in 2025 3.
Competition and Industry Landscape
The AI industry is experiencing intense competition, with rivals such as OpenAI, Google, and China's DeepSeek also scaling up their infrastructure 25. This race for dominance in AI technology is driving massive investments in hardware and computing power across the sector.
Environmental Concerns
Source: Quartz
xAI's rapid expansion has not been without controversy. The company's first data center, Colossus, located in Memphis, Tennessee, has faced scrutiny from environmental groups. These organizations claim that xAI is operating more gas turbines than initially approved, raising concerns about the environmental impact of such large-scale AI infrastructure 3.
Investor Interest and Financing Terms
Despite the high costs and risks associated with AI development, investor interest in xAI remains strong. The company has attracted high-profile investors such as Andreessen Horowitz, Sequoia Capital, and Nvidia 3. However, some lenders are reportedly seeking protective measures, such as requiring debt repayment within three years and imposing borrowing caps to limit their risk exposure 2.
As the AI industry continues to evolve rapidly, xAI's ambitious funding and expansion plans underscore the significant resources required to compete at the forefront of artificial intelligence technology. The outcome of this funding round and xAI's ability to execute its vision will likely have far-reaching implications for the future of AI development and competition in the tech industry.
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