The Elon Musk-backed company is working with Valor Equity Partners to raise up to $12 billion more|TED Conference|CC BY-NC 2.0
Elon Musk is aggressively raising funds to fuel his artificial intelligence startup xAI, aiming to stay competitive with giants like Meta, Google and Microsoft.
Just weeks after raising $10 billion through stock and debt sales, the Musk-backed company is working with Valor Equity Partners to raise up to $12 billion more, according to the Wall Street Journal.
The funding would help xAI lease Nvidia chips for its second mega data center, Colossus 2, to power its Grok chatbot.
Despite rapid growth—doubling its Memphis data center to 200,000 GPUs in 92 days—xAI remains unprofitable and expects to burn $13 billion in 2025.
SpaceX has already injected $2 billion into xAI. The AI startup has reportedly pledged Grok’s intellectual property as collateral for a $5 billion debt raised in June.
Private equity Valor aims to raise capital through a complex debt structure backed by the leased Nvidia chips. But lenders remain cautious due to the chips’ rapid depreciation and Grok’s recent performance issues.
However, many investors trust Musk’s track record, betting that his empire could backstop xAI if needed. A financing deal could close in the coming weeks.