Elon Musk's XAI aggressively raises 20 billion USD in funding! Not only selling shares, but also using NVIDIA GPUs as collateral

Elon Musk’s AI startup xAI has successfully completed a Series E funding round totaling $20 billion, with a valuation of approximately $230 billion. This round not only demonstrates the capital market’s confidence in xAI’s technological trajectory but also marks a new phase in AI infrastructure development, integrating financial innovation with industry deep collaboration. The funds will primarily be used to expand its Colossus super data center in Memphis, aiming to scale its computing power to the level of millions of GPUs to accelerate the research and development of the next-generation large language model Grok.

$20 Billion Innovative Financing Structure: Special Purpose Vehicle (SPV) and Asset-Backed Mode

xAI completed the Series E funding, surpassing the previously set target of $15 billion, ultimately reaching $20 billion.

To effectively manage the massive capital expenditure required for expanding the Colossus supercomputer, xAI introduced innovative structured financial instruments in this round. According to Bloomberg, the financing plan is divided into two parts: approximately $7.5 billion in equity financing and up to $12.5 billion in debt financing, with the debt portion utilizing a structure similar to a Special Purpose Vehicle (SPV).

Under this model, the financing funds will be directed to an independent SPV entity, dedicated to purchasing high-performance GPUs (such as H100/H200 and the future Rubin series) from NVIDIA. These hardware assets will serve as the core assets and collateral for the SPV. xAI will then lease the computing power from the SPV, converting the substantial hardware procurement costs into long-term operating expenses (Opex). This “hardware asset-backed” model not only optimizes xAI’s balance sheet structure but also provides investors with tangible assets as risk mitigation, ensuring priority supply during chip supply tightening cycles.

NVIDIA, Cisco, and Middle Eastern Sovereign Wealth Funds Play Key Roles

This funding round brought together leading global technology companies, sovereign wealth funds, and top asset management institutions, each playing critical and complementary roles within xAI’s ecosystem:

NVIDIA: Technology Foundation and Supply Chain Strategic Partner NVIDIA is not only a financial investor in this round but also a key strategic partner. Its participation ensures that xAI can secure a stable supply of top-tier GPUs amid the surge in global demand for high-performance AI chips. NVIDIA’s technology roadmap will be deeply integrated with xAI’s infrastructure planning, directly supporting the expansion of the Colossus cluster’s computing power.

Cisco: Network Infrastructure and Performance Optimization Partner As the Colossus cluster scales toward millions of GPUs, internal data center network transmission efficiency becomes a critical bottleneck. Cisco, as a strategic investor, will provide advanced high-speed Ethernet technology and data center network solutions. Cisco’s role is to address latency and bandwidth challenges in large-scale distributed training, ensuring that the massive computing resources can operate efficiently in coordination.

Diversified Global Capital Alliance: Long-term Funding Support The financing lineup also includes sovereign wealth funds from the Middle East (such as Qatar Investment Authority QIA, UAE MGX) and top asset management firms like Fidelity and Valor Equity Partners. These institutions provide substantial and long-term capital, offering solid liquidity support for xAI in the capital-intensive AI arms race.

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