Billionaire Elon Musk’s AI startup, xAI, is expanding its funding round to $20 billion, with investors including Nvidia, Bloomberg reported. The financing combines equity and debt through a special purpose vehicle (SPV) that will purchase Nvidia processors and lease them to xAI for its Colossus 2 project, the company’s largest data center in Memphis.

Nvidia, led by CEO Jensen Huang, is expected to invest nearly $2 billion in the equity portion, reflecting its broader strategy to accelerate AI adoption among customers. The funding round, initially estimated at about half its current size, includes roughly $7.5 billion in equity and up to $12.5 billion in debt through the SPV. Under this structure, the SPV buys Nvidia processors, which xAI will lease for five years, allowing investors to recover capital gradually while the GPUs secure the loan rather than the company itself. Apollo Global Management and Diameter Capital Partners are participating in the debt portion, while Valor Capital leads the equity round, with Apollo also investing directly in xAI. This comes after Musk recently stated on X that xAI was “not raising any capital right now.”

The deal highlights a year of massive AI infrastructure funding, with major technology companies investing tens of billions in data centers and chips. OpenAI recently signed a multiyear deal for AMD chips, Meta secured $29 billion for data centers, and Oracle raised $38 billion in debt to expand cloud and AI operations.

Nvidia executives have emphasized leveraging their financial strength to accelerate AI adoption across industries. CFO Colette Kress noted in September that while Nvidia plans to use cash reserves for strategic acquisitions and share buybacks, its priority remains enabling partners to develop and deploy AI faster.

Despite its growing valuation, xAI continues to seek capital, reportedly burning nearly $1 billion per month. The startup, which previously raised around $10 billion, has also drawn on Musk’s other ventures, including SpaceX, for funding. Later this year, Tesla shareholders will vote on whether the automaker should invest in xAI. Musk positions AI as central to his futuristic projects, ranging from self-driving cars to autonomous robots.