Nvidia reportedly to invest up to $2bn in Elon Musk’s xAI

Core Insights - Nvidia is participating in a $20 billion funding round for xAI, led by Elon Musk, with an equity contribution of up to $2 billion [1] - The funding structure includes a special purpose vehicle (SPV) for purchasing Nvidia GPUs, which xAI will lease for five years [2] - xAI's funding round consists of an estimated $7.5 billion in equity and up to $12.5 billion in debt [2] Company Involvement - Valor Capital is leading the equity raise, with Apollo Global Management and Diameter Capital Partners involved in the debt tranche [3] - Nvidia's CFO, Colette Kress, emphasized the company's commitment to supporting AI adoption through direct capital investments [3] Financial Context - xAI is facing high operating costs, with a reported cash burn rate of around $1 billion monthly [4] - Earlier this year, xAI raised approximately $10 billion in combined equity and debt [4] Broader Industry Trends - Musk is leveraging capital from other entities, including SpaceX, and Tesla shareholders will vote on a potential investment in xAI [5] - The AI sector is experiencing a surge in capital commitments, with notable investments from companies like Meta Platforms and Oracle [6]