Musk's xAI to Raise $20 Billion After Nvidia and Others Boost Round

Financing Structure - XAI utilizes a special purpose vehicle (SPV) to finance its GPU acquisition for the Colossus 2 data center [1] - The SPV purchases Nvidia processors and rents them back to XAI [1] - Investors are backing the chips themselves, not necessarily investing directly in XAI [2] - Wall Street funds the GPUs, and XAI rents them for 5 years, with investors being repaid through rental fees [3] - This structure results in less debt on XAI's corporate balance sheet and faster access to compute [3] Investment Details - The financing round totals approximately $20 billion, split between $125 billion (12250%) of debt and $75 billion (7500%) in equity [2] - Nvidia is investing around $2 billion into the equity portion of the deal [2] Strategic Implications - Nvidia's investment is part of its strategy to fuel AI demand and infrastructure buildout [2] - The financing structure could become a template for other major AI players to manage the rapid scaling of AI infrastructure [3]