Bloomberg Intelligence xAI to Raise $20 Billion After Nvidia and Others Boost Round
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Oct 8, 2025 Elon Musk's AI startup xAI is raising a whopping $20 billion, with significant backing from Nvidia. There's a debate over whether the FCC will relax TV ownership caps, particularly impacting broadcasters like Nexstar-Tegna. Dell's future looks bright with growing demand for AI servers, while Cisco is making its mark in AI networking but faces tough competition. In the auto sector, BMW is struggling with lower guidance due to weak sales in China, and Tesla is rolling out new models under $40K to ramp up competition.
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GPU Financing As A New Infrastructure Template
- xAI is using a $20 billion SPV combining $12.5B debt and $7.5B equity to buy NVIDIA GPUs that it will lease back over five years.
- This structure shifts debt off xAI's balance sheet and could become a template for mega AI infrastructure deals.
Capacity Race And Talent Pull
- xAI is rapidly building capacity with two data centers, and Jensen Huang bets Elon Musk could reach one gigawatt of capacity first.
- Talent demand at xAI is high, making the startup attractive in the AI hiring competition despite limited public metrics on Grok usage.
Vendor Funding Feels Circular But Framed As Flexible
- NVIDIA's $2 billion equity contribution looks circular because the SPV will buy NVIDIA chips with those proceeds, raising governance and commercial questions.
- Jensen Huang frames such deals as non-mandatory vendor arrangements, highlighting flexibility in long-term cloud relationships.