Elon Musk’s artificial intelligence startup, xAI, has secured a staggering $20 billion in new funding, with AI chip giant Nvidia leading the charge in a move that significantly escalates the AI arms race.
The massive funding round, revealed by Bloomberg, includes $7.5 billion in equity and up to $12.5 billion in debt via a special purpose vehicle (SPV). This unique SPV setup will allow xAI to acquire and lease Nvidia’s high-end processors for five years, effectively enabling the company to scale up its AI computing power while minimizing long-term debt exposure.
Nvidia alone is reportedly contributing as much as $2 billion in equity, as the chipmaker aggressively supports key AI developers to accelerate the industry’s rapid expansion. The move also sends a strong signal in Musk’s favor, just days after Nvidia’s chief competitor, AMD, struck a deal with Sam Altman’s OpenAI — Musk’s main rival in the space.
Other prominent players joining the round include Apollo Global Management, Diameter Capital Partners, and Valor Capital. Apollo is backing both the equity and debt portions of the deal, underlining the level of institutional confidence in Musk’s AI ambitions.
xAI has been raising capital at a breakneck pace, with over $10 billion in equity and debt already secured earlier this year. The startup has reportedly been burning through cash at a rate of $1 billion per month as it races to build a formidable alternative to OpenAI and other Silicon Valley giants.
Musk has also leaned on his broader business empire to fuel xAI’s rise. SpaceX has already invested in the company, and Tesla shareholders are expected to vote later this year on whether to inject additional capital from the electric vehicle maker into Musk’s AI venture.
The strategic partnership with Nvidia gives xAI a powerful foundation of compute resources as it looks to develop its flagship AI products — including the Grok chatbot, which Musk hopes will eventually compete with ChatGPT and other generative AI tools.
With Musk doubling down and Nvidia officially backing both sides of the Altman–Musk rivalry, the stage is set for an even more intense showdown between two of the most powerful forces shaping the future of artificial intelligence.
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