TMTPOST -- Nvidia Corporation CEO Jensen Huang on Wednesday confirmed a report about his company’s involvement in fundraising of Elon Musk’s artificial intelligence (AI) startup xAI.
Credit：Alibaba Cloud
Huang mentioned Nvidia’s investment in xAI when he was asked about Nvidia’s reported helping finance xAI’s fundraising, and whether such deals amounted to circular financing, under which Nvidia lends money to AI startups and in return, the borrowers buy its chips.
\"I'm super excited about the financing opportunity they're doing,\" Huang said in a CNBC interview on Wednesday. \"The only regret I have about xAI — we're an investor already — is that I didn't give him more money.\"
Moreover, Huang expressed his regret for not making bigger investment in the Musk’s AI venture. He praised Musk's track record, saying the Tesla and SpaceX founder has a knack for building transformative companies. \"Almost everything Elon's part of, you really want to be part of as well,\" he said.
Huang hailed xAI as part of a new generation of AI firms, along with OpenAI and ANthropic, that are reshaping computing as their models become more powerful and commercial viable. \"For the last several years, they were generating tokens at a loss,\" he said. \"But in the last several months, it's become clear the technology is now reasoning, doing research, using tools — it's actually useful. The tokens are profitable now.\"
xAI is lifting its initially planned financing to $20 billion, tapping backers including Nvidia, Bloomberg earlier Wednesday cited people with knowledge of the matter. The financing deal is said to in the form of a special purpose vehicle (SPV) involving equity and debt, and Nvidia is investing up to $2 billion in the equity portion of the deal.
The equity portion of xAI’s financing could be amount to $7.5 billion, and the debt part to be $12.5 billion, according to the report. It called the deal structure unique as it would be “backed by GPUs as opposed to the company.”
The financing will reportedly purchase Nvidia chips and then rent them to xAI for use in its Colossus 2 project, its largest datacenter site, which is located in Memphis. xAI and Nvidia didn’t comment on the report. If it is accurate, the new funding size that the startup operating the Grok model has almost doubled from last month.
It was reported on September 20 that xAI has raised more than $10 billion at a $200 billion valuation, and the funding round includes investment from Valor Capital, the Qatar Investment Authority and Prince Al Waleed bin Talal via his Kingdom Holding Co.
Nvidia has shown a general willingness recently to make deals with industry players. The company on September 22 said it reached a letter of intent on a strategic partnership to deploy at least 10 gigawatts (GW) of Nvidia systems for OpenAI’s next-generation AI infrastructure to train and run its next generation of models on the path to deploying superintelligence.
To support the planned deployment including data center and power capacity, Nvidia made its largest-ever spend commitment. It intends to invest up to $100 billion in OpenAI as the new Nvidia systems are deployed. The first phase is targeted to come online in the second half of 2026 using the Nvidia Vera Rubin platform.
Huang on Wednesday said Nvidia’s commitment under the partnership with OpenAI is “very different” from the latter’s deal with AMD in that it allows Nvidia to directly sell to the ChatGPT developer. Just like the investment in xAI, Huang felt regretful that Nvidia didn’t go bigger. He said his “only regret is that we didn’t invest more” after Nvidia invested in OpenAI.
Huang in the interview showed upbeat on the AI demand. “This year, particularly the last six months, demand of computing has gone up substantially,” he said. He explained that we are seeing both computing power and the demand experiencing exponential growth at the same time. As to Nvidia’s most advanced graphic processing unit (GPU), he stressed demand for Blackwell is “really, really high” as we’re at the beginning of a new industrial revolution.
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