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Nvidia Said to Back xAI’s $20 Billion GPU SPV as AI Megadeals Draw Bubble Warnings

Fresh financing reports coincide with the Bank of England flagging stretched AI valuations plus rising concentration risk.

Overview

  • Elon Musk’s xAI is reported to be raising up to $20 billion via an SPV that will buy Nvidia processors to lease to xAI’s Colossus 2 site in Memphis, with Nvidia investing as much as $2 billion in the equity portion alongside Apollo, Diameter Capital, and Valor Capital.
  • The financing reportedly blends about $7.5 billion of equity with up to $12.5 billion of GPU‑backed debt over five years, offering a template for securing scarce chips without loading the operating company with equivalent debt.
  • OpenAI this week announced a multiyear deal to deploy about 6 gigawatts of AMD accelerators with an option to purchase up to 10% of AMD, following September’s separate arrangement in which Nvidia would invest up to $100 billion as OpenAI commits to 10 gigawatts of Nvidia systems.
  • Regulators and analysts are warning about vendor financing and circular revenue risks, with the Bank of England citing stretched AI valuations and heavy index concentration as potential triggers for a sharp correction.
  • Executives describe strong compute demand—Dell plans $20 billion of AI server shipments in fiscal 2026—even as studies and market data highlight patchy returns and heavy financing, including roughly $157 billion in US tech bond issuance this year tied to data‑center buildouts.