Elon Musk’s xAI is reportedly expanding its fundraising target to a staggering $20 billion, with the majority of the round structured as debt financing.
Sources indicate that Nvidia is contributing $2 billion to the effort — but not through a traditional equity stake. Instead, the deal uses a Special Purpose Vehicle (SPV) designed to purchase Nvidia GPUs for xAI’s next-generation compute cluster, Colossus 2.
How the Deal Works
Under the arrangement, the SPV buys Nvidia’s high-end GPUs and rents them to xAI for five years, effectively letting xAI access massive compute power without immediate capital expenditure.
This structure mirrors recent AI infrastructure deals where companies use financing vehicles to secure compute capacity amid global GPU shortages.
The Bigger Picture
The move underscores how central AI compute access has become to scaling large language models and competing with giants like OpenAI and Anthropic.
By leveraging debt and hardware partnerships, xAI is rapidly building one of the world’s largest independent AI infrastructures — with Colossus 2 expected to power the company’s next wave of frontier models.
