Elon Musk’s artificial intelligence company, xAI, is reportedly preparing one of the largest private capital raises in tech history, with plans to secure around $20 billion in a combined equity and debt deal. Around $7.5 billion is expected to come from equity investors, while about $12.5 billion will be raised through debt, reports Bloomberg. The company has already attracted major investors, including Nvidia, which is expected to play a central role as both a supplier of chips and a financial backer.
According to the report, Nvidia is expected to invest up to $2 billion directly into xAI and will also help set up a dedicated funding entity that will purchase Nvidia GPUs and lease them back to the company. Clearly, such an arrangement would allow xAI to expand its computing capacity rapidly, avoiding supply delays and reducing the immediate financial burden of acquiring costly hardware.
Importantly, the potential round is expected to mainly support the development of Colossus 2, xAI’s next-generation data center designed to handle massive AI workloads. Notably, Musk has previously described it as a supercluster capable of training and running extremely large AI models. Actually, it will serve as an upgrade to the company’s first Colossus system, which was funded earlier this year through a $10 billion raise (split evenly between debt and equity). That round brought the Musk-led company’s total funding to around $17 billion and gave the company an estimated valuation of around $75 billion. Last month, Elon Musk denied reports that xAI was raising $10 billion at a $200 billion valuation.
All this is happening at a time when xAI recently appointed Anthony Armstrong (a former Morgan Stanley banker) as its Chief Financial Officer. Armstrong will oversee financial operations for both xAI and X (formerly Twitter). At the same time, the company has also witnessed several high-profile departures in recent months. For example, in July 2025, xAI’s finance chief, Mike Liberatore, left his position. Then, in August 2025, the company’s legal head, Robert Keele, and co-founder Igor Babuschkin also departed.
Financially, the Musk-owned AI firm is expected to earn $1 billion by the end of 2025 and grow to over $13 billion annually by 2029, projecting profitability by 2027 despite a first-quarter EBITDA loss of $341 million. Meanwhile, in his recent post, Elon Musk revealed plans for xAI to release a ‘great’ AI-generated game and for Grok Imagine to produce a fully watchable AI-created movie by the end of 2026.
However, despite these efforts and advancements, xAI continues to face controversies and challenges. For example, the company has faced backlash over the ‘spicy mode’ in Grok Imagine, criticism for explicit AI companion interactions, and public outrage over antisemitic outputs. Recent reports also suggest that the company has laid off 500 employees amid a shift toward more specialized AI roles.
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