Elon Musk's xAI Secures $20 Billion in Innovative Financing Deal with Nvidia

Musk's xAI Taps Nvidia and Others to Raise $20 Billion

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. Nvidia's CEO Jensen 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." Bloomberg's Ed Ludlow reports on "Bloomberg Surveillance." (Source: Bloomberg)

Elon Musk's xAI to raise $20 billion using special Nvidia-backed financing structure

Elon Musk's artificial intelligence startup, xAI, is reportedly expanding its latest funding round to $20 billion, roughly double earlier estimates, as investor appetite for AI infrastructure continues to surge. According to Bloomberg, the round will combine about $7.5 billion in equity and up to $12.5 billion in debt, using a creative structure that allows xAI to rent, instead of directly owning, its AI chips. The financing is expected to flow through a special-purpose vehicle that will buy Nvidia chips and lease them back to xAI for five years. In this way, the vehicle, not xAI, retains the debt. Such a setup gives financiers collateral in the form of hardware, while letting Musk's company scale its compute power without adding traditional corporate debt. The deal underlines how massive injections of capital are shaping the AI revolution -- the "most expensive corporate battle of the 21st century" as the Wall Street Journal describes it. For xAI, which Bloomberg previously reported is burning close to $1 billion a month, the latest infusion could be critical. Still, Nvidia and other rumored participants declined to confirm the deal. Musk, for his part, has denied the $1 billion monthly burn rate and also insisted on X last month that the company is "not raising any capital right now." News to the contrary is, he wrote, "fake news." It also fits a familiar pattern. Musk frequently downplays financing efforts, the better to project strength and control the narrative. Acknowledging the raise outright might increase capital costs, with perceived need amplifying perceived risk. It could also invite scrutiny from Tesla shareholders and regulators, so it's easier -- and perhaps true, in a narrow sense -- to say he isn't raising cash, even as money floods in on his behalf.

Elon Musk's xAI to Raise $20 Billion from NVIDIA and Others: Report | AIM

NVIDIA is reportedly investing up to $2 billion in the equity part of the transaction. xAI, the AI startup founded by Elon Musk, is raising its current round of financing to up to $20 billion from backers that include NVIDIA, reported Bloomberg on October 8. The report added that this involves equity and debt financing through a special purpose vehicle (SPV), which will purchase NVIDIA's hardware systems and rent them to xAI for its Colossus 2 data centre project. These hardware systems will be rented out for a period of five years, according to the report. The report also states that the total financing will be divided between approximately $7.5 billion of equity and $12.5 billion of debt in the SPV. NVIDIA is reportedly investing up to $2 billion in the equity part of the transaction. Apollo Global Management and Diameter Capital Partners are also participating in the fundraising. It was reported in July that SpaceX, the space technology company also founded by Musk, approved an investment of $2 billion in xAI as part of the startup's $5 billion equity fundraising effort. While the CNBC reported last month that xAI is raising $10 billion at a $200 billion valuation, Musk confirmed in a social media post that the company 'is not raising any capital right now.' In another development, the Financial Times reported that Anthony Armstrong, a former Morgan Stanley banker, has been appointed as the company's new chief financial officer. He is said to have advised on the Twitter takeover and was Musk's 'key lieutenant' during his stint at the Department of Government Efficiency (DOGE) in the US Administration. Armstrong will serve as the financial head for both xAI and the social media platform X, according to a report citing sources familiar with the matter. His appointment follows the departure of Mike Liberatore, who previously held the position. Liberatore has now become OpenAI's new business finance officer.

Elon Musk's xAI reportedly raising $20 billion in deal tied to Nvidia chips

Elon Musk's artificial intelligence startup, xAI, is reportedly in the process of raising $20 billion in a new financing round that includes a significant investment from Nvidia. The funding is larger than initially planned and is structured to secure the massive number of processors required to build out the company's AI infrastructure. According to people with knowledge of the matter, the financing includes both equity and debt in a special purpose vehicle (SPV). This SPV will be used to purchase Nvidia processors, which will then be rented to xAI for use in its Colossus 2 project, the company's largest data center located in Memphis. The complex deal is reportedly structured as follows: Nvidia is said to be investing as much as $2 billion in the equity portion of the deal, a strategic move by the chipmaker to help accelerate its customers' AI investments. The debt portion, which is backed by the GPUs themselves rather than xAI's corporate assets, is being participated in by firms including Apollo Global Management and Diameter Capital Partners. The equity portion is being led by Valor Capital. This unique deal structure, where the hardware itself collateralizes the debt, could provide a model for other tech companies looking to finance large-scale infrastructure projects while minimizing their direct debt exposure. This massive financing effort is the latest example of the frenetic pace of investment in the AI industry. Major tech companies are spending tens of billions of dollars to build the infrastructure necessary to develop advanced AI models. Data center capacity is widely seen as a critical component for developing top-tier AI models. Elon Musk's xAI is particularly in need of significant capital. The company, which already raised about $10 billion earlier this year, has reportedly been burning through cash at a rate of $1 billion per month. Musk has also drawn investments from his other companies, including SpaceX. Tesla investors will soon vote on whether the electric car company should also invest in xAI. Musk views AI as the foundational technology for many of his futuristic products, including self-driving cars and fully autonomous robots, making the success of xAI critical to his broader ambitions.

Musk's xAI nears $20 billion capital raise tied to Nvidia chips, Bloomberg News reports

Elon Musk's AI startup xAI is reportedly raising $20 billion, including a $2 billion equity investment from Nvidia. This financing, split between equity and debt, is intended to acquire Nvidia graphics processing units for xAI's data center. The funding round aims to support xAI's development as an alternative to ChatGPT. Elon Musk's AI startup xAI is raising more financing than initially planned, including an equity investment from Nvidia, to bring its ongoing funding round to $20 billion, Bloomberg News reported on Tuesday, citing people with knowledge of the matter. Nvidia is investing as much as $2 billion in the equity portion of the deal, Bloomberg reported, adding that the financing, which includes equity and debt, will be tied to the Nvidia graphics processing units that xAI plans to use in its data center Colossus 2. XAI's financing would be split between about $7.5 billion of equity and as much as $12.5 billion of debt, and is structured through a special purpose vehicle that will be used to buy Nvidia processors, the report said. Nvidia declined to comment, while xAI did not immediately respond to a request for comment. In September, Elon Musk denied a CNBC report that said xAI was raising $10 billion at a post-money valuation of $200 billion. Musk added that "xAI will of course raise capital in the coming months, just not right now." Musk launched xAI in July 2023 as an alternative to OpenAI's ChatGPT.

Jensen Huang Wishes Nvidia Gave Elon Musk More Money For xAI - NVIDIA (NASDAQ:NVDA)

NVIDIA Corp (NASDAQ:NVDA) CEO Jensen Huang had praise for billionaire Elon Musk when asked about an investment in xAI on Wednesday. NVDA shares are trending higher. See what is driving the move here. Investing In Elon Musk As a leader in the artificial intelligence sector, Nvidia regularly invests in companies in the space. The topic was brought up during an interview between CNBC and Huang on Wednesday. "xAI, I'm super excited about the financing opportunity that they're doing. You know, the only, the only regret I have about xAI, we're an investor already, that the only regret I have is I didn't give him more money," Huang said of Musk and his AI company. Huang said Musk asked Nvidia if they wanted to invest in the new round and he was "delighted" to be asked. "Almost everything that Elon is part of, you really want to be part of as well." Huang said the funding is "not vendor financing, per se," which comes as a report said the funding would be used to help buy Nvidia GPUs. "That's an investment into a really great future company." Read Also: Jensen Huang Drops Bombshell Warning: Nvidia's Guidance Assumes 'China Zero' -- Says US Could 'Hurt American Companies Worse' With Total Tech Ban Future of AI The Nvidia CEO said the transition from CPU to generative AI computing powered by GPUs "is just starting." "That transition is just starting, so we've got to build into half a trillion dollars worth of capacity infrastructure that's already naturally growing by itself, and we're in the beginning phases of that work," Huang said. The Nvidia CEO said the new generation of AI companies includes OpenAI, Anthropic and xAI. Asked who is going to pay for the buildup, Huang said it could be companies and consumers. "You know, a lot of OpenAI customers are consumers, and they're paying for it." Huang also highlighted that there are general intelligence and specialized intelligence companies with room for multiple competitors in the space. "We're always looking for great startups to invest in. One of my favorite ones was CoreWeave." Similar to his call for wishing he had invested more in xAI, Huang said something similar about CoreWeave Inc (NASDAQ:CRWV), which went public earlier this year. "All of these investments that we've made recently, we've made some really terrific investments and largely, my only regret is that we didn't invest more." Read Next: Nvidia Q2 Earnings Highlights: Double Beat, $60B Share Buyback, Huang Says 'AI Race Is On' Photo: jamesonwu1972 via Shutterstock NVDANVIDIA Corp$189.042.16%OverviewCRWVCoreWeave Inc$140.799.28%Market News and Data brought to you by Benzinga APIs

Nvidia to invest in Musk's xAI as part of $20 billion funding

The Elon Musk-backed artificial intelligence startup xAI is raising more financing than initially planned -- including an equity investment from Nvidia -- to bring its ongoing funding round to $20 billion, according to people with knowledge of the matter. The financing, which includes equity and debt, will be tied to the Nvidia graphics processing units that xAI plans to use in Colossus 2, 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 in Memphis. Nvidia is investing as much as $2 billion in the equity portion of the deal, 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.

Nvidia CEO Invests in xAI and is Surprised by AMD/OpenAI Pact | PYMNTS.com

The executive confirmed the chipmaker's participation in xAI's latest funding round in an interview with CNBC Wednesday (Oct. 8). An earlier report by Bloomberg News said that Musk's artificial intelligence (AI) startup is aiming to raise about $20 billion, with sources familiar with the matter telling the news outlet that Nvidia would contribute $2 billion. Huang told CNBC he's "super excited" about the funding opportunity, adding that he wishes he could give the billionaire more money. "Almost everything that Elon is part of, you really want to be part of as well," Huang said. The report notes that Nvidia has also invested in AI data center operator CoreWeave, which Huang said he views as one of several "terrific investments" made by his company recently. "[They're] really special companies, and they're building, they're part of our ecosystem building out the AI infrastructure for the world," the CEO said. Huang also said he's surprised Advanced Micro Devices (AMD) offered 10% of itself to OpenAI as part of a multibillion-dollar pact announced this week. "It's imaginative, it's unique and surprising, considering they were so excited about their next generation product," he told "CNBC's Squawk Box." "I'm surprised that they would give away 10% of the company before they even built it. And so anyhow, it's clever, I guess." Nvidia itself has pledged a record $100 billion to OpenAI, an investment CNBC noted that highlighted concerns about the "circular nature" of some AI infrastructure agreements. Asked how OpenAI will pay for its end of the deal with Nvidia, Huang said, "They don't have the money yet." "They're going to have to raise that money through, first of all, their revenues, which is growing exponentially, equity or debt," he added. "They gave us the opportunity to invest alongside other investors when the time comes." In related news, PYMNTS wrote earlier this week about AI's maturation into enterprise infrastructure in the wake of recent infrastructure announcements from Nvidia and others, and this trends consequences for the world of payments and finance. "As institutions scale agentic decision systems, every layer from fraud detection to credit scoring now depends on intelligence that is explainable, stable, and auditable," PYMNTS wrote. "Deploying AI at scale is also proving costly."

Nvidia Reportedly Bets $2 Billion On Elon Musk's xAI -- And Its Own GPUs Will Fuel 'Colossus 2' Gigawatt-Scale AI Supercluster - Apollo Asset Management (NYSE:APO), NVIDIA (NASDAQ:NVDA)

Jensen Huang-led Nvidia Corporation (NASDAQ:NVDA) is reportedly investing as much as $2 billion in Elon Musk's AI company and Grok-parent xAI. Jensen Huang Deepens Partnership With Elon Musk's AI Venture Nvidia's investment is part of xAI's ongoing funding efforts, which have grown beyond initial plans to reach $20 billion, according to Bloomberg, citing people with knowledge of the matter. xAI's funding is divided between $7.5 billion in equity and $12.5 billion in debt, the report said. This is structured through a special purpose vehicle. The funding will be used to purchase Nvidia's GPUs, which xAI plans to deploy at "Colossus 2," its AI data center in Memphis, Tennessee. Musk previously said that Colossus 2 will become the world's first Gigawatt AI training cluster. The funding also includes participation from Apollo Global Management (NYSE:APO), Diameter Capital Partners and Valor Capital, the report noted. xAI did not immediately respond to Benzinga's request for comments. Nvidia declined to comment. See Also: Tesla Robotaxi Downloads Outpace Uber By 40% On Apple's App Store Amid Ease Of Self-Driving Regulations Musk-Led xAI's Rapid Growth And Heavy Spending In July earlier this year, xAI secured $10 billion in debt and equity financing. In September, Musk denied reports that the startup was raising another $10 billion in funding at a valuation of $200 billion. However, as per the report, xAI burns through $1 billion per month, indicating that it requires funds to continue. Later this year, Musk's EV giant Tesla Inc. (NASDAQ:TSLA) shareholders will also vote on whether the automaker should invest directly in xAI. Price Action: Nvidia shares dropped 0.25% on Tuesday, reaching $184.04. In after-hours trading, it continues to drop, according to Benzinga Pro. Benzinga's Edge Stock Rankings place Nvidia's Growth in the 97th percentile and Quality in the 93rd percentile, highlighting its strong standing compared to leading AI peers such as TSMC and AMD. Read Next: Elon Musk's xAI Hires Trump Aide Stephen Miller's Wife Katie Amid Controversial Memphis Data Center Permit Win Photo: gguy/ Shutterstock APOApollo Asset Management, Inc.$126.05-0.51%OverviewNVDANVIDIA Corp$184.99-0.30%TSLATesla Inc$437.00-3.59%Market News and Data brought to you by Benzinga APIs

Investors including Nvidia back Musk's xAI in $20B funding round:...

A group of investors including Nvidia are backing Elon Musk's xAI in an ongoing funding round that has racked up $20 billion thus far, according to a report. The financing round includes debt and equity in a special purpose vehicle that will buy Nvidia chips and rent them to xAI, people with knowledge of the matter told Bloomberg. Musk's AI firm will then use the processors for its Colossus 2 project - its massive Memphis data center, the report said. Jensen Huang's chipmaker is investing as much as $2 billion in the equity portion of the transaction, sources told Bloomberg. Apollo Global Management and Diameter Capital Partners are participating in the debt raise, while Valor Capital is leading the equity part of the deal, according to the report. Apollo is also investing in xAI. Nvidia declined to comment. Apollo, Diameter, Valor and xAI did not immediately respond to The Post's requests for comment. XAI plans to split the funding into $7.5 billion of equity and as much as $12.5 billion of debt in the special purpose vehicle, sources told Bloomberg. It will be used to buy Nvidia processors and rent out the chips for five years, according to the report. The complex deal structure could be used by other companies looking to decrease debt exposure while continuing their push into AI. Tech companies have poured billions of dollars into AI infrastructure, rushing to build out costly data centers that can power the emerging technologies. AMD said Monday that it has reached a deal to supply OpenAI with hundreds of thousands of AI chips over several years, offering the firm a potential 10% stake in the company. Mark Zuckerberg's Meta has reached several multibillion-dollar deals, including a recent $29 billion financing package for new data center sites. Oracle has also raised a $38 billion debt package for these power-hungry data centers. Top executives at Nvidia have said they plan to use financing to speed up AI advancements not just at their company, but across the entire industry. The firm's chief financial officer, Colette Kress, said at a Goldman Sachs conference in September that Nvidia is seeking out strategic stock repurchases and acquisitions - but the priority is using cash to help other companies ramp up their AI efforts. Musk's AI firm is also hungry for extra capital, as companies across the tech sector notch huge funding rounds with their eyes set on new infrastructure projects. Earlier this year, xAI raised about $10 billion of corporate equity and debt. But that tall number likely isn't enough, as the company has been burning through about $1 billion a month, according to a Bloomberg report. Musk - the world's richest person with a $484 billion net worth, per Forbes - has turned to his other companies, including rocket and space exploration firm SpaceX, for investment opportunities. Investors in Tesla are scheduled to vote later this year on whether his electric vehicle maker should also invest in xAI. His portfolio of companies have grown more entangled as Musk has argued that AI tech is crucial to the success of his other firms - like fully autonomous cars and robots at Tesla.

NVIDIA Bets $20 Billion on Elon Musk's xAI: The Biggest AI Chip Deal in History

NVIDIA is teaming up with Elon Musk's AI startup xAI in a groundbreaking $20 billion chip agreement to compete with rivals like OpenAI and Anthropic. The deal places NVIDIA's growing role as the backbone of the global AI race. Experts believe that the partnership could redefine the AI industry and challenge OpenAI's dominance. Elon Musk's artificial intelligence startup, xAI, raised more financing than initially planned, with backers including , bringing the total to $20 billion, according to reports. Bloomberg reported that the financing includes both equity and debt in a special purpose vehicle that will purchase NVIDIA processors and rent them to for use in its Colossus 2 project, the largest data center site located in Memphis. NVIDIA is expected to invest around $2 billion in the equity portion of the transaction, a strategy by the chipmaker to accelerate its customers' AI investments. XAI's fundraising effort, previously reported by Bloomberg at half the amount, may continue to grow. XAI's financing would be split between approximately $7.5 billion of equity and as much as $12.5 billion of debt in the SPV, according to reports.

Nvidia CEO Huang says US not far ahead of China on AI By Investing.com

Investing.com -- Nvidia (NASDAQ:NVDA) CEO Jensen Huang stated that the United States is overall "not far ahead" of China in artificial intelligence development during a CNBC interview on Wednesday. Huang expressed support for the H-1B visa policy, saying it allows the US to attract the best talent. "Immigration is the foundation of the American dream," the CEO noted during the interview. The tech executive reported that demand for Nvidia's Blackwell chips is "really, really high" and shared that his company is "always looking for startups to invest in." Huang emphasized that Nvidia's goal is to support AI infrastructure success and help the ecosystem grow. When discussing investments, Huang revealed his "only regret" was not giving Elon Musk's xAI more money and not investing in OpenAI earlier. He noted that OpenAI's revenue is growing exponentially. Bloomberg News reported on Tuesday that xAI is raising more financing than initially planned, with the funding round reaching $20 billion. Nvidia is reportedly investing up to $2 billion in the equity portion of the deal. The financing, which includes both equity and debt, will be connected to Nvidia graphics processing units that xAI plans to use in its Colossus 2 data center. Huang also expressed interest in Musk's ventures, stating that Nvidia wants "to be part of almost everything Musk is involved in."

Nvidia among investors in xAI's $20 bln capital raise- Bloomberg By Investing.com

Investing.com-- Elon Musk-backed artificial intelligence startup xAI increased a planned capital raise to as much as $20 billion, including an investment from NVIDIA Corporation (NASDAQ:NVDA), to procure more AI processors, Bloomberg reported on Tuesday. The financing is largely aimed at procuring more Nvidia chips that xAI plans to use in its upcoming Colossus 2 data center in Memphis, the report said. The capital raise includes equity and debt. Nvidia will invest as much as $2 billion in the equity portion of the deal, Bloomberg reported. The move is largely part of Nvidia's strategy to help accelerate its customers' AI investments, with the chipmaker having pledged about $100 billion to OpenAI last week. Previous reports said xAI was aiming to raise around $10 billion in its ongoing funding round. Other reports also valued xAI at $200 billion in September, making it among the most valuable startups in the world, behind OpenAI.