Elon Musk's AI startup xAI has successfully completed a $20 billion Series E funding round, valuing the company at approximately $230 billion. This round not only demonstrates the capital market's confidence in xAI's technological path but also marks a new phase in AI infrastructure development, combining financial innovation with deep industry collaboration. The funds will primarily be used to expand its Colossus super data center in Memphis, aiming to increase its computing power to the level of millions of GPUs to accelerate the development of the next-generation large-scale language model, Grok.
20 Billion Innovative Financing Structure: Special Purpose Vehicle (SPV) and Asset-Backed Model
xAI has completed its Series E funding round, raising more than its initial target of $15 billion, ultimately reaching $20 billion.
To effectively manage the massive capital expenditures required to expand the Colossus supercomputer, xAI introduced innovative structured financial instruments in this funding round. According to Bloomberg , the financing plan consists of two parts: approximately $7.5 billion in equity financing and up to $12.5 billion in debt financing. The debt portion is structured similarly to a special purpose vehicle (SPV).
In this model, the financing funds are directed to a separate SPV entity specifically for purchasing high-performance GPUs (such as the H100/H200 and future Rubin series) from NVIDIA. These hardware assets serve as the core assets and collateral for the financing of this SPV. xAI then obtains the right to use the computing power from this SPV through a leasing agreement, transforming the huge hardware procurement costs into long-term operating expenses (Opex). This "hardware asset collateral" model not only optimizes xAI's balance sheet structure but also provides investors with tangible assets as risk mitigation, ensuring priority supply during periods of chip supply shortages.
Nvidia, Cisco, and Middle Eastern sovereign wealth funds all play important roles.
This funding round brought together leading global technology companies, sovereign wealth funds, and top asset management institutions, each playing a key and complementary role in xAI's ecosystem:
NVIDIA: A Technological Cornerstone and Strategic Supply Chain Partner. NVIDIA is not only a financial investor in this funding round, but also a key strategic partner. Its participation ensures xAI has a stable supply of top-tier GPUs amid surging global demand for high-performance AI chips. NVIDIA's technology roadmap will be deeply integrated with xAI's infrastructure plans, directly supporting the computing power expansion of the Colossus cluster.
Cisco: Network Infrastructure and Performance Optimization Partner. As the Colossus cluster scales to millions of GPUs, network transmission efficiency within data centers has become a critical bottleneck. Cisco, as a strategic investor, will provide its advanced high-speed Ethernet technology and data center networking solutions. Cisco's role is to address the latency and bandwidth challenges of large-scale distributed training, ensuring that massive computing resources can operate efficiently and collaboratively.
A diversified global capital alliance: The long-term funding lineup also includes sovereign wealth funds from the Middle East (such as the Qatar Investment Authority QIA and the UAE MGX) and top asset management firms such as Fidelity and Valor Equity Partners. These institutions provide substantial and long-term-oriented funding, offering robust liquidity support for xAI in the capital-intensive AI arms race.
This article, titled "Musk x AI Raises a $20 Billion Bullet! Not Only Selling Stocks, But Also Using Nvidia GPUs as Collateral," first appeared on ABMedia, a ABMedia .
