xAI secured $20bn in Series E funding, surpassing its initial $15bn target
Nvidia & Cisco joined as strategic investors alongside Qatar & Fidelity
Round features an innovative $12.5bn GPU-backed debt vehicle to acquire chips
Elon Musk’s xAI on Tuesday said it has completed a $20 billion funding round, with participation from investors including Nvidia Corp. The Series E round exceeded the company’s initial $15 billion target, and the proceeds will be used to scale compute infrastructure and build some of the world’s largest GPU clusters.
Other participants named in the round include Valor Equity Partners, Qatar Investment Authority, Fidelity Management, Cisco Investments, MGX and Baron Capital Group, among others.
1 January 2026
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In a statement, xAI said the financing “will accelerate our world-leading infrastructure buildout, enable the rapid development and deployment of transformative AI products reaching billions of users, and fuel groundbreaking research advancing xAI's core mission: Understanding the Universe.”
Deal Details
The AI start-up did not disclose individual investment amounts or provide a split between debt and equity in the round. However, a Bloomberg report stated that xAI had planned to structure the financing with about $7.5 billion in equity and up to $12.5 billion in debt routed through a special purpose vehicle, with Nvidia expected to invest as much as $2 billion.
The special purpose vehicle will be reportedly used to purchase Nvidia processors, which xAI plans to rent out over a five-year period, enabling Wall Street financiers to recover their capital. The structure is unusual in that the financing is backed by the GPUs rather than by the company itself, and could serve as a template for technology firms seeking to fund large infrastructure builds while limiting balance-sheet debt exposure.
Potential Use of Proceeds
Musk’s xAI is aggressively raising capital to finance a major expansion of its data-centre infrastructure. According to a Bloomberg report, the company, which raised about $10 billion through a mix of equity and debt in 2025, still requires several billion dollars more as it continues to burn roughly $1 billion a month.
The report added that xAI is planning to expand its Memphis data-centre campus by acquiring a third facility in the area. Musk has said the expansion would lift the company’s artificial intelligence computing capacity to nearly 2 gigawatts, underscoring the scale of its infrastructure ambitions.
Musk has repeatedly described AI as foundational to his long-term product vision, spanning fully autonomous vehicles, humanoid robots and other advanced technologies, with xAI positioned as a central pillar of that broader strategy.
