Elon Musk’s artificial intelligence startup, xAI, has raised $20 billion in a major funding round led by chipmaking giant Nvidia, solidifying the company’s position as one of the fastest-growing players in the AI sector. The deal combines $7.5 billion in equity and up to $12.5 billion in debt through a special purpose vehicle (SPV) that will allow xAI to acquire and rent Nvidia processors for five years.
According to Bloomberg, Nvidia’s leadership investment—estimated at roughly $2 billion—demonstrates its aggressive strategy to accelerate AI adoption across industries. The structure of the deal, backed by Nvidia chips rather than xAI’s corporate assets, may serve as a model for future financing in the high-demand AI hardware market.
The $20 billion raise is double the amount initially anticipated and marks a significant boost for Musk’s firm, which has been burning through approximately $1 billion per month to expand infrastructure and talent. In addition to Nvidia, major participants include Apollo Global Management, Diameter Capital Partners, and Valor Capital. Apollo reportedly contributed to both the equity and debt portions of the transaction.
xAI, launched by Musk in 2023, aims to rival OpenAI by developing “truth-seeking” artificial intelligence systems that align more closely with human reasoning. The new funding provides fresh momentum as the company races to scale up computing capacity and train its next-generation AI models.
Nvidia’s investment in xAI comes just days after OpenAI, led by Sam Altman, struck a multi-billion-dollar chip deal with Nvidia rival AMD. The move positions Nvidia at the center of a high-stakes competition between two of the world’s most prominent AI leaders—Altman and Musk.
Musk has also leveraged his broader business empire, including SpaceX, for cross-company support of xAI. Later this year, Tesla shareholders are set to vote on whether to invest in the AI startup as well.
