Elon Musk’s AI startup xAI said on Tuesday it has closed a $20 billion funding round, substantially above an initial target, in a move the company says will accelerate development of its Grok family of models and the expansion of its Colossus data centres. According to the announcement reported by Macau Business, xAI touted deployment of what it calls the world’s largest AI supercomputers and said its Colossus I and II sites in Memphis now house over one million high‑performing GPUs. [1]
The round drew a broad investor list, with Macau Business naming Valor Equity Partners, StepStone Group, Fidelity Management & Research, the Qatar Investment Authority, MGX and Baron Capital among participants, and Nvidia listed as both investor and infrastructure partner. Nvidia’s involvement is widely reported to include equity and a hardware supply arrangement that ties financing to its GPUs. Industry reporting suggests the round combines equity and debt, with Nvidia taking a material role in ensuring xAI priority access to processors. [1][2][3][5]
Several outlets describe the financing as structured through a special purpose vehicle that will purchase Nvidia processors and lease them to xAI, a mechanism intended to let lenders recover funds via the hardware rather than rely solely on the startup’s credit. Yahoo Finance and other reports say the package includes both equity and debt and is linked to the Colossus 2 centre in Memphis, where hardware will be deployed under multi‑year leases. [2][3]
The size and composition of the round vary between accounts. Tom’s Hardware and Financial Express report the deal as roughly $7–8 billion in equity and up to $12 billion in debt, with Nvidia expected to invest about $2 billion of equity and provide GPUs under a leasing arrangement. Spanish outlet El País suggested an overall equity/debt split that could valuate xAI at near $200 billion, reflecting differing market estimates of the company’s worth. These figures have not been uniformly confirmed by xAI. [5][6][7]
xAI has been public about product progress: Macau Business reported the rollout of Grok 4, Grok Voice, which it says is available in Tesla vehicles, and plans to train Grok 5 alongside new consumer and enterprise offerings. The company also claimed that Grok and X platform services reach about 600 million monthly active users. Editorial distance is warranted as these are company assertions about reach and product status. [1]
The announcement comes amid controversy over Grok’s content moderation. Macau Business noted an international backlash after reports that Grok’s “Spicy Mode” allowed users to generate sexualised deepfakes of women and minors, an issue that has raised regulatory and reputational questions for the startup even as it scales capacity. Those concerns underline potential governance and safety challenges that large‑scale model deployment can expose. [1]
Separately, reporting from Tom’s Hardware indicates xAI is continuing to expand physical capacity in Memphis, purchasing additional buildings to raise training capacity and targeting nearly 2 gigawatts of power demand as part of a broader “Macrohard” project to build AI‑generated software. If realised, that scale would place xAI among the most compute‑intensive AI operators in the United States, intensifying competition for chips, power and data‑centre real estate. [4]
The involvement of Nvidia, lenders and sovereign investors highlights continued investor appetite for AI infrastructure despite questions about return on the vast capital now chasing the sector. Industry sources say the structure of the deal, mixing equity with asset‑backed debt tied to GPUs, reflects lenders’ and suppliers’ desire to de‑risk exposure while securing supply of scarce compute. How effectively xAI translates the new capital and hardware into reliable, revenue‑generating products remains to be seen. [2][3][5]
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##Reference Map:
- [1] (Macau Business) - Paragraph 1, Paragraph 5, Paragraph 6
- [2] (Yahoo Finance) - Paragraph 2, Paragraph 3, Paragraph 8
- [3] (Yahoo Finance) - Paragraph 2, Paragraph 3, Paragraph 8
- [4] (Tom’s Hardware) - Paragraph 7
- [5] (Tom’s Hardware) - Paragraph 4, Paragraph 8
- [6] (Financial Express) - Paragraph 4
- [7] (El País) - Paragraph 4
Source: Noah Wire Services