Elon Musk's artificial intelligence firm xAI has reportedly partnered with investment firm Valor Equity Partners to secure as much as USD 12 billion in debt financing.
According to a Wall Street Journal article citing sources familiar with the matter, the funds would be used primarily for procuring Nvidia chips to support the expansion of xAI’s compute capacity.
The chips are intended to be deployed in a new large-scale data centre designed to handle the training and operation of Grok, xAI’s conversational AI model. The infrastructure would be leased to xAI, allowing the firm to advance its AI development efforts without committing to direct capital expenditure upfront.
Some prospective lenders involved in the deal are reportedly pushing for a repayment timeline of three years and proposing borrowing limits to reduce their exposure. It’s worth noting that, at the time of writing, neither xAI nor Valor Equity Partners responded to media requests for comment.
Competitive pressure in AI development
Developing and operating high-end AI systems remains a capital-intensive endeavour. The costs are driven by hardware requirements, computing power, and technical expertise, factors that have become increasingly critical as xAI competes with firms like OpenAI, Google, and China-based DeepSeek.
According to a recent post on social platform X, a representative from xAI disclosed that Grok is currently being trained using 230,000 graphics processing units (GPUs), including 30,000 of Nvidia’s GB200 chips. The same post noted plans to activate a new GPU supercluster equipped with an initial batch of 550,000 Nvidia GB200 and GB300 chips.
Despite recent reports estimating xAI could spend around USD 13 billion in 2025, earlier statements from Elon Musk suggested that the firm is not actively looking for additional funding. Elon further clarified that xAI has sufficient capital to meet its near-term objectives.
