SAN FRANCISCO, 8 October 2025 – Elon Musk’s artificial intelligence (AI) startup xAI is reportedly expanding its current fundraising round to US$20 billion (RM84.37 billion), with major backing from Nvidia Corp, as the company races to build out infrastructure for its large-scale AI ambitions.
Sources familiar with the deal said the financing involves both equity and debt through a special purpose vehicle (SPV) that will purchase Nvidia processors and lease them to xAI for use in its Colossus 2 project, the company’s largest data centre located in Memphis.
Nvidia is said to be investing up to US$2 billion in the equity portion of the round, a move that aligns with its broader strategy to accelerate AI adoption by supporting clients’ development efforts. The structure, backed by graphics processing units (GPUs) rather than xAI’s corporate assets, may serve as a model for other tech firms seeking to reduce balance sheet exposure while expanding compute capacity.
A spokesperson for Nvidia declined to comment, while xAI has not responded to media requests. Musk previously said on X (formerly Twitter) that the company was “not raising any capital right now.”
AI Investment Race Heats Up
The xAI financing adds to a wave of multibillion-dollar funding across the AI sector, as global tech giants vie to secure the hardware needed for next-generation model training.
OpenAI recently announced a multiyear deal to use AMD chips, while Meta Platforms Inc and Oracle Corp have raised US$29 billion and US$38 billion respectively for data centre expansion.
According to sources, xAI’s round will consist of US$7.5 billion in equity and up to US$12.5 billion in debt, with Apollo Global Management, Diameter Capital Partners, and Valor Capital among participating investors. Apollo and Diameter are backing the debt tranche, while Valor is leading the equity portion.
In the broader bond market, US tech firms have issued roughly US$157 billion in debt this year, a 70% increase from 2024 which underscores the immense capital appetite driving the AI boom.
Musk’s Push for AI Integration
xAI, which has already raised around US$10 billion earlier this year, is said to be burning through about US$1 billion monthly as it scales operations. Musk has tapped his wider corporate ecosystem, including SpaceX, to support xAI, and Tesla investors are expected to vote later this year on whether the automaker should also invest.
Musk has long positioned AI as a core pillar of his technology vision, powering innovations from self-driving vehicles to humanoid robots and xAI’s latest fundraising suggests the billionaire is doubling down on that future
