- NVIDIA will invest $2 billion as equity in xAI‘s current funding round.
- xAI aims to raise a total of $20 billion through both debt and equity to expand its AI infrastructure.
- The financing round will fund purchases of Nvidia processors and new data centers, using a special purpose vehicle structure.
- Apollo Global Management and Diameter Capital Partners are leading lenders in the debt financing, while Valor Capital heads the equity portion.
- The Nvidia chips are set for installation in the Colossus 2 data center in Memphis.
xAI, the Artificial Intelligence firm headed by Elon Musk, is undertaking a new fundraising effort to secure $20 billion for investments in its AI infrastructure. The company plans to use a mix of debt and equity to purchase Nvidia processors and expand its data center operations.
According to a report from Bloomberg, Nvidia will contribute $2 billion as an equity investment as part of the round. xAI intends to raise $7.5 billion in equity and $12.5 billion in debt, an increase from its earlier target of $10 billion.
The structure of the financing involves a special purpose vehicle designed to purchase Nvidia chips. Over the next five years, xAI will rent out these processors, enabling Wall Street investors to recover their capital. The chips will be installed at the company’s largest data center, Colossus 2, in Memphis.
Bloomberg reports that leading lenders for the debt portion include Apollo Global Management and Diameter Capital Partners, with Valor Capital leading the equity arrangement. Market sentiment as of late Tuesday indicated cautious perspectives for both xAI and Nvidia among retail investors.
This move comes as several major technology companies are making large-scale investments to support the demands of generative AI. Nvidia recently announced its own $100 billion investment in AI company OpenAI, while other technology firms such as Meta and Oracle have lined up multibillion-dollar packages to develop new data center infrastructure.
