Nvidia to Finance Musk's XAI Chips as Part of $20B Deal (finance.yahoo.com)

Nvidia is helping bankroll Elon Musk’s xAI in an expanded funding round that Bloomberg reports could reach $20 billion. The package combines roughly $7.5 billion of equity and up to $12.5 billion of debt placed into a special-purpose vehicle (SPV) that will buy Nvidia GPUs and lease them to xAI for use in its Colossus 2 data center in Memphis. Nvidia is said to be putting in as much as $2 billion of the equity. The SPV-backed chips will be rented to xAI for about five years, creating a GPU-backed repayment stream for lenders and a way for xAI to scale compute without adding equivalent corporate debt. This deal is significant because it signals a new financing playbook for capital‑intensive AI infrastructure: hardware-collateralized SPVs that reduce balance-sheet exposure while accelerating model training capacity. For the AI ecosystem, it underlines sustained, large-scale demand for high-end GPUs and Nvidia’s strategic shift from pure chipmaker to financier-enabler of customer deployments. Participants named include Apollo Global Management, Diameter Capital Partners and Valor Capital. The move also comes amid intense industry spending (OpenAI, Meta, Oracle deals) and underscores xAI’s urgent need for cash—Bloomberg says the startup burns roughly $1 billion a month—raising both opportunity for rapid model development and questions about long-term funding and supply dynamics.