xAI looking to raise $12 billion in new funding as Elon Musk promises a new Colossus 2 Supercluster with 550,000 Nvidia Chips
xAI
is working to secure up to $12 billion in additional funding just weeks after raising $10 billion, as the company races to keep pace in the competitive AI market while burning through massive amounts of cash.
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The new funding round is being facilitated by Valor Equity Partners, whose founder Antonio Gracias maintains close ties to Musk, according to the Wall Street Journal. The capital would be used to purchase advanced
Nvidia chips
for a second massive data center called Colossus 2, designed to train and power xAI's
AI chatbot Grok
.
Massive cash requirements fuel expansion
The fundraising effort comes as xAI faces significant financial pressures, with projections showing the startup could burn through approximately $13 billion in 2025.
Some potential lenders are seeking repayment within three years and want to cap borrowing amounts to limit their exposure to risk.
Musk announced on social media Tuesday that xAI currently operates 230,000 graphics processing units, including 30,000 GB200 AI chips, in its first supercluster called Colossus 1. The new Colossus 2 facility will initially feature 550,000 GB200 and GB300 chips.
The Memphis-based Colossus 1 data center, housing 200,000 GPUs, already ranks among the world's largest AI chip clusters.
However, the facility has faced environmental controversies, with groups challenging xAI's use of gas turbines for power generation.
Despite earlier claims of having "plenty of capital," xAI has now raised at least $20 billion through various funding mechanisms, including a $2 billion investment from Musk's SpaceX. The company was valued at $75 billion in its last funding round, though it remains far from profitability with minimal revenue generation.
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