Elon Musk’s artificial intelligence company, xAI, is reportedly collaborating with Valor Equity Partners, an investment firm, to potentially secure up to USD 12 billion in debt financing.

According to a Wall Street Journal report based on information from unidentified sources, the funds will primarily be allocated toward acquiring Nvidia chips for enhancing xAI’s computational capabilities.

These chips are intended for deployment in a newly designed large-scale data center dedicated to training and operating Grok, xAI’s conversational AI model. The infrastructure will be leased by xAI, enabling the firm to accelerate its AI development without immediate capital outlay.

Some potential lenders involved in the deal are reportedly advocating for a repayment period of three years and limiting borrowing amounts to minimize their financial risk.

The intensity of competition in AI development

Building and operating high-end AI systems remains an expensive endeavor, with costs driven by hardware requirements, computing power, and specialized knowledge. As xAI faces competitive challenges from firms such as OpenAI, Google, and China-based DeepSeek, the financial stakes have grown significantly.

In a recent update on social platform X, an xAI representative disclosed that Grok is currently being trained using 230,000 graphics processing units (GPUs), including 30,000 Nvidia GB200 chips. The company also plans to activate a new GPU supercluster with an initial batch of 550,000 Nvidia GB200 and GB300 chips.

While recent estimates suggest xAI might spend around USD 13 billion in 2025, earlier statements from Elon Musk indicated that the company does not currently seek additional funding. Musk further stated that xAI has adequate capital to meet its immediate objectives.