Elon Advances on Altman’s AI Castle Armed With Nvidia’s $2B and a Rent-to-Own Army of GPUs

Elon: “Yeah, so it’s called Colossus 2. It’s powered by enough GPUs to smokebomb half of Memphis and costs about the same as rebuilding Greece.”

Jensen: “You son of a b*tch, I’m in.”

Elon Musk’s xAI just pulled off one of the most absurd capital raises in the AI arms race… and if you’ve been following this circus, you know that’s saying something. The company’s bagged $20 billion… about what Meta blew on the metaverse, except this time, there’s at least a 5% chance something intelligent might actually come out of it.

According to reports, xAI’s latest raise wasn’t supposed to get this ridiculous. The initial target was about half that, but then Nvidia (the Walter White of GPU dealers) decided to throw in up to $2 billion of its own money. And because Musk loves a little financial gymnastics, the deal includes a mix of $7.5 billion in equity and $12.5 billion in debt via a “special purpose vehicle,” or SPV. Translation: a fancy shell company that buys Nvidia processors and rents them back to xAI.

(Source: Quartz)

So yeah, Elon just financed his next AI dream using what’s basically a high-tech rent-to-own plan. The chips will be leased over five years, letting Wall Street collect their sweet interest while Elon tries to make Grok (xAI’s chatbot) less likely to tell people it’s depressed.

And where’s all this money going? Straight into Colossus 2… xAI’s mega data center project in Memphis. The same one that allegedly gave a local asthma patient flashbacks to the Industrial Revolution and got Elon sued by the NAACP for polluting the neighborhood. The man said he’d “rebuild civilization,” but apparently he’s starting with Memphis’ air quality.

(Source: NAACP)

Of course, this whole thing comes with a slight problem: xAI is reportedly blowing through $1 billion per month. So Elon’s been tapping (read: transferring money from) SpaceX, Tesla, and even X (formerly Twitter) to keep the lights on. Tesla shareholders will actually vote soon on whether their EV company should bankroll Elon’s side quest to build a sentient robot army. (No pressure guys, just the whole fate of humanity in your hands).

But hey, in this economy, everyone’s buying chips like they’re going out of style. Meta just signed a $29 billion data center deal. Oracle raised $38 billion to fund its cloud (and is still somehow losing money on Nvidia rentals, as we found about yesterday). And earlier this week we saw OpenAI’s cuddling up to AMD just in case Jensen Huang ever stops answering Sam Altman’s calls.

The structure of Musk’s deal is “unique,” meaning it’s designed so he can technically say he’s not raising money… while absolutely raising money. And Nvidia? They’re the real winners here. They’ll sell you the chips, lend you the cash to buy them, and maybe even invest in your company, as long as you promise to keep feeding your GPU addiction.

So yeah, Musk might be throwing billions into the AI abyss just to keep pace with Altman, but there’s no shortage of banks and Silicon Valley VCs ready to keep refilling his snack bowl. Because in the great AI oil rush, nobody cares if you hit a dry well… as long as you keep renting drills from Nvidia. And as far as Jensen goes… he’s somehow managed to turn every AI partnership into a recurring revenue stream disguised as innovation. Nvidia’s not a company anymore… it’s the tollbooth on the road to artificial intelligence, and everyone’s paying the fee.

At the time of publishing this article, Stocks.News holds positions in Meta and Tesla as mentioned in the article.