Elon Musk’s xAI startup is reportedly expanding its funding round to $20 billion, double earlier estimates. The financing includes $7.5 billion in equity and up to $12.5 billion in debt, structured through a special-purpose vehicle to rent Nvidia chips. This setup allows xAI to scale its compute power without traditional corporate debt.

Nvidia will invest roughly $2 billion in equity, part of the funds going towards xAI’s Colossus 2 data center buildout near Memphis. The deal highlights the significant capital inflows driving the AI revolution, shaping what the Wall Street Journal calls the “most expensive corporate battle of the 21st century.”

Despite reports of xAI burning close to $1 billion monthly, Musk denies a monthly burn rate and claims the company isn’t raising capital. Public denial may hinge on optics and semantics, with the $20 billion deal’s structure allowing him to argue it’s not technically a fundraising effort, aligning with Musk’s tendency to downplay financing activities for strategic reasons.

Acknowledging the raise could increase capital costs and perceived risk, inviting scrutiny from Tesla shareholders and regulators. Musk’s approach of not directly confirming fundraising efforts is consistent with his strategy of projecting strength and controlling the narrative, even as significant capital flows into xAI through the $20 billion deal.

Read more at Yahoo Finance: Elon Musk’s xAI to raise $20 billion using special Nvidia-backed financing structure