Elon Musk’s xAI completes $20 billion funding round with Nvidia among key backers

Elon Musk’s artificial intelligence startup xAI has completed a $20 billion funding round from investors including Nvidia Corp., Valor Equity Partners and the Qatar Investment Authority, Bloomberg reported.

The investment had been in the works for several months, with Nvidia planning to commit as much as $2 billion, Bloomberg had earlier reported. xAI did not disclose individual investment amounts or provide a breakdown between debt and equity. The company said other investors in the round included Stepstone Group, Fidelity Management & Research Co., MGX and Baron Capital Group, while Cisco Systems Inc.’s investment arm participated as a strategic investor.

xAI stated that the financing would accelerate its infrastructure buildout, enable faster development and deployment of artificial intelligence products at global scale, and support research aligned with its core mission of understanding the universe.

People familiar with the matter told Bloomberg that xAI had planned for the funding to be split between about $7.5 billion in equity and up to $12.5 billion in debt through a special purpose vehicle. The vehicle is intended to purchase Nvidia processors, which xAI will rent out over a five-year period, allowing Wall Street financiers to recoup their investment. The structure, backed by GPUs rather than the company itself, is seen as a potential template for technology firms seeking to limit balance-sheet debt exposure.

Data centre capacity has become critical for the development of advanced AI models, even as debate continues over how much additional computing power directly improves performance. Musk’s xAI has been particularly capital-intensive. The company has already raised around $10 billion in corporate equity and debt in 2025 but still requires billions more, Bloomberg reported, citing people familiar with the matter, as the firm has been burning through roughly $1 billion per month.

Musk has also said xAI plans to expand its large data centre complex in Memphis by purchasing a third building, a move that would take the company’s artificial intelligence computing capacity to nearly 2 gigawatts.

The billionaire has drawn on his broader business empire for support, including SpaceX. Tesla Inc. shareholders voted in November on a proposal for an investment in xAI. Although more shareholders voted in favour than against, Tesla general counsel Brandon Ehrhart said there was a significant number of abstentions. The board is expected to consider its next steps in light of the level of shareholder support. The vote was not binding, but Musk has publicly backed the idea in the past, including floating the possibility of a $5 billion infusion in 2024.