(Reuters) -Elon Musk’s artificial intelligence startup xAI is working with a financier to secure up to $12 billion more for its expansion plans, the Wall Street Journal reported on Tuesday, citing people familiar with the situation.
Valor Equity Partners, an investment firm whose founder, Antonio Gracias, has close ties to Musk, is in talks with lenders to raise the capital, according to the report.
The money would be used to buy a massive supply of advanced Nvidia chips that would be leased to xAI for a new huge data center meant to help train and power its AI chatbot Grok, the WSJ reported.
Valor and xAI did not immediately respond to Reuters’ requests for comment.
Some lenders want the debt to be repaid within three years and to cap the amount of money borrowed in order to limit their risk, the report said.
Training and deploying advanced AI systems is expensive, requiring costly hardware, intensive compute and skilled engineers in a highly competitive market where rivals such as OpenAI, Google and China’s DeepSeek are trying to dominate the technology.
XAI is training Grok on 230,000 graphics processing units, including Nvidia’s 30,000 GB200 AI chips, in a supercluster, with inference handled by the cloud providers, Musk said in a post on X on Tuesday.
He added that another supercluster will soon launch with an initial batch of 550,000 GB200 and GB300 chips.
The AI startup was expected to burn through about $13 billion over the course of 2025, according to media reports.
Earlier this month, the Financial Times reported that xAI was in talks to raise more money in a deal that could value the AI startup between $170 billion and $200 billion.
In response, Musk had said xAI was not seeking funding. “We have plenty of capital.”
(Reporting by Jaspreet Singh in Bengaluru; Editing by Anil D’Silva and Alan Barona)
