Nvidia aimed to invest up to $2 billion in this initiative, which has been under discussion for several months. Among the investors listed by xAI are Stepstone Group, Fidelity Management & Research Co., MGX, and Baron Capital Group, though specific investment amounts and the separation of debt and equity in the deal were not disclosed.
The firm noted that another strategic investor was the investment group associated with Cisco Systems Inc.
Sources familiar with the matter revealed that xAI planned to allocate the funding into approximately $7.5 billion in equity and up to $12.5 billion in debt through a special purpose vehicle. This vehicle will allow Wall Street bankers to recoup their investments by utilizing it to acquire Nvidia processors, which xAI will lease for five years.
This unique deal structure, secured by the GPUs rather than the company’s equity, could serve as a blueprint for tech firms looking to mitigate their debt burdens.
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While some critics have raised concerns about the extent to which processing power can enhance technology, the capacity of data centers is considered crucial for developing top AI models. Funding is especially critical for Musk’s xAI.
Insiders report that the company, which has already secured nearly $10 billion in corporate equity and debt in 2025, still requires additional billions as it is spending approximately $1 billion per month.
Musk has plans to expand xAI’s large data center complex in Memphis by acquiring a third nearby building. This expansion will boost the company’s AI computing capacity to nearly two gigawatts.
The entrepreneur has also sought assistance for xAI from his business network, including SpaceX. In November, Tesla Inc.’s shareholders were presented with the opportunity to vote on the investment idea.
xAI emphasized the capabilities of Grok, its AI chatbot integrated with its social media platform, X, in its announcement. Recently, this product has raised regulatory concerns for allowing users to share images of individuals— including minors—without their consent through AI-generated content.
