Elon Musk’s AI start-up xAI is working with Valor Equity Partners to secure up to $12 billion in financing for its rapid expansion, the Wall Street Journal reported Tuesday.
The proposed debt facility would enable xAI to purchase a vast inventory of advanced Nvidia GPUs, which would be leased back to power a new, large‑scale data centre dedicated to training and running its Grok chatbot.
According to the report, Valor Equity Partners, whose founder Antonio Gracias maintains close ties to Musk, is negotiating with a syndicate of lenders to underwrite the multi‑billion‑dollar funding. Some prospective lenders are reportedly seeking repayment terms within three years and caps on borrowing amounts to limit risk.
The deal underscores the immense capital requirements of cutting‑edge AI ventures, where hardware costs, data‑centre operations and specialised engineering talent drive up expenditure.
Grok’s Supercluster
xAI currently operates its first Grok supercluster with approximately 230 000 GPUs, including 30 000 Nvidia GB200 chips, Musk revealed in a social media post on Tuesday. Inference workloads are handled by third‑party cloud providers to optimise flexibility. He added that a second supercluster, powered by an initial batch of 550 000 GB200 and next‑generation GB300 GPUs, will soon come online, further multiplying xAI’s compute capacity.
Industry analysts estimate that xAI will burn through roughly $13 billion over the course of 2025, as the company races to keep pace with rivals such as OpenAI, Google DeepMind and China’s DeepSeek.
Earlier this month, the Financial Times reported that xAI was in talks to raise fresh capital at a valuation between $170 billion and $200 billion. Musk denied at the time that the start‑up was actively seeking funding, tweeting “We have plenty of capital.”
The planned funding push follows xAI’s decision in March to reject an $800 million acquisition bid from Meta Platforms. By remaining independent, xAI has signalled its long‑term ambition to become a leading provider of AI infrastructure.
The new data centre, underpinned by the Nvidia hardware financed through Valor, will bolster xAI’s capability to train ever‑larger language models and deploy real‑time AI agents, including future iterations of Grok.
Grok Improved
Musk announced a significant upgrade to Grok, the AI chatbot developed by his xAI venture, as he seeks to position it as an ideologically “cleaner” alternative to existing conversational platforms.
In a post on X on Friday, Musk urged users to “notice a difference” when querying the newly enhanced Grok and hinted at an ambitious roadmap to retrain the system on a more accurate corpus of human knowledge.
Musk revealed that the forthcoming major release, possibly dubbed Grok 3.5 or Grok 4, will boast “advanced reasoning” capabilities, enabling the AI to “rewrite the entire corpus of human knowledge, adding missing information and deleting errors.”
