Elon Musk Just Locked In $20 Billion for AI--And Nvidia's All In

Elon Musk's artificial intelligence startup xAI is ramping up its fundraising ambitions to $20 billion as investors rush to secure stakes in the next phase of the AI boom. Backed by heavyweight partners including Nvidia NVDA and Apollo Global Management APO, the deal is structured through a special purpose vehicle combining equity and debt to fund xAI's Colossus 2 supercomputing campus in Memphis. People familiar with the transaction said Nvidia could invest up to $2 billion in equity, while Apollo, Diameter Capital Partners, and Valor Capital are joining the financing roundone of the largest private AI infrastructure raises to date.

The financing structure is unusual but strategic: about $7.5 billion in equity and as much as $12.5 billion in debt, all secured by Nvidia processors that will be rented back to xAI for five years. The design allows Wall Street backers to capture GPU-driven returns without the full corporate risk of lending directly to the startup. Nvidia's CFO Colette Kress recently told investors that the company intends to use its growing financial muscle to accelerate AI adoption across industriesan approach that fits perfectly with xAI's push to scale computing capacity faster than traditional balance-sheet funding would allow.

The timing reflects a broader pattern sweeping through Silicon Valley. OpenAI has just signed a multi-year deal with AMD AMD, Meta META has raised $29 billion for data centers, and Oracle has tapped $38 billion in debt to expand infrastructure. For Musk, xAI's capital intensity is no surprisethe company is reportedly burning through $1 billion a month as it races to compete with AI leaders. Later this year, Tesla (TSLA) shareholders will vote on whether the automaker should invest directly in xAI, a move that could tighten the link between Musk's AI ambitions, self-driving vehicles, and his broader vision for autonomous robotics.