Nvidia plans to invest up to $2bn in Elon Musk’s xAI venture, part of a $20bn funding round. The capital will go towards acquiring Nvidia GPUs for xAI’s data center in Tennessee. The funding includes a mix of equity and debt, with a special purpose vehicle involved in the transaction.

The investment will allow institutional investors to recover their funds through chip rentals. xAI is facing high operating costs, with reports of $1bn monthly cash burn rates. Earlier this year, the company raised $10bn. Tesla shareholders will vote on investing in xAI, part of Musk’s AI-focused strategy.

Nvidia’s CFO highlighted the company’s commitment to supporting AI adoption industry-wide. xAI’s funding round, led by Valor Capital, includes an equity component of $7.5bn and up to $12.5bn in debt. Apollo Global Management and Diameter Capital Partners are participating in the debt tranche.

Elon Musk has leveraged capital from entities within his corporate group to support xAI. Despite Musk’s previous statement that xAI wasn’t raising capital, the venture has secured additional funding. This investment comes as the AI sector sees a surge in capital commitments, with companies like OpenAI and Meta Platforms making significant moves.

Read more at Yahoo Finance: Nvidia reportedly to invest up to $2bn in Elon Musk’s xAI