Nvidia to invest $2bn in Elon Musk’s xAI
The funds will buy Nvidia GPUs for xAI’s new Colossus 2 data centre in Memphis.
Nvidia is reportedly investing up to $2bn in Elon Musk’s AI company, xAI, as part of a $20bn funding round aimed at scaling its Colossus 2 data centre in Memphis. The capital will be used to buy Nvidia GPUs, essential for powering xAI’s next generation of AI models.
The funding package combines about $7.5bn in equity and up to $12.5bn in debt, structured through a special purpose vehicle that will lease the hardware to xAI over five years. The debt is secured by the GPUs themselves, allowing investors to recover their costs through chip rentals.
xAI faces mounting financial pressure, with reports indicating a cash burn of around $1bn per month. The firm raised $10bn earlier in the year and continues to draw on capital from Musk’s other ventures, including SpaceX.
The move comes amid an intense funding surge across the AI sector, as OpenAI, Meta and Oracle also announce multi-billion-dollar investments in infrastructure. Nvidia’s latest deal with xAI further cements its position at the centre of the global AI hardware ecosystem.
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