Prof G Markets xAI Teams Up with Nvidia in $20B Funding Round & Chinese Tech Stocks Hit Decade Highs
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Oct 9, 2025 
In this discussion, Ed Ludlow, co-anchor of Bloomberg Technology, unpacks the $2 billion investment structure between NVIDIA and xAI, exploring the benefits of SPV financing for AI startups. He tackles concerns about a potential AI bubble amid circular deals. Alice Han, a China economist at Greenmantle, highlights the factors behind the surge in Chinese tech stocks, including Beijing's pivot towards the private sector and AI advancements. She provides insights on emerging investment opportunities in sectors like robotics and semiconductors.
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SPV Leasing Shifts GPU Burden
- XAI and NVIDIA used an SPV to fund GPUs so XAI can lease compute without taking on upfront capital or debt on its balance sheet.
- The SPV buys hardware, rents it to XAI over ~5 years, and shifts depreciation and upgrade risks to investors.
Who Bears The Long-Term Risk?
- The SPV model protects XAI from owning rapidly depreciating GPUs and from immediate capital expenditures.
- It also raises unanswered questions about who bears long-term upgrade or equity exposure after the lease ends.
Circular Deals Are Functionally Circular
- NVIDIA and other big AI backers argue their financing isn't mandatory circular spending and recipients can buy other vendors' chips.
- But practically, recipients are likely to buy cutting-edge NVIDIA gear, making the flows effectively circular.