xAI, Elon Musk’s tech startup, is working with the investment firm Valor Equity Partners to raise up to $12 billion to finance its expansion, according to a Wall Street Journal report.
Per the report, which cited sources familiar with the matter, the raise aims to finance a "jumbo-sized" new data center called Colossus 2.
This facility will house an enormous number of advanced Nvidia GPUs, initially 550,000 chips, including GB200 and GB300 models, used to train and run xAI’s AI chatbot Grok.
xAI is reportedly partnering closely with Valor, an investment firm led by Antonio Gracias who has close ties to Musk, to structure and secure this debt financing from private lenders.
Some lenders are reportedly pushing for repayment terms within three years and want to cap the total amount borrowed to reduce risk.
The WSJ highlighted that xAI is burning through cash quickly, with an estimated $13 billion operating cash burn expected in 2025.
The company just a few weeks ago raised $10 billion to support the intensive capital investments required to compete with other AI leaders like OpenAI and Google.