xAI Seeks $20 Billion for Colossus 2, Nvidia Invests Big
xAI, Elon Musk's artificial intelligence company, is seeking a massive $20 billion in funding for its Colossus 2 project. This next-generation AI supercomputer aims to surpass the current Colossus, the world's largest with 200,000 GPUs and over an exabyte of storage.
The funding round, launched in early October 2025 in Memphis, Tennessee, has drawn significant interest. Nvidia, a leading player in AI hardware, has committed $2 billion in equity, totaling $7.5 billion alongside several venture capital firms. Notably, SpaceX has also contributed $2 billion. Reports suggest potential investments from Middle Eastern funds, including those from Saudi Arabia, UAE, and Qatar.
Nvidia's involvement is strategic. The company recently struck a $100 billion deal with OpenAI, operator of ChatGPT. This new investment in Colossus 2 is expected to benefit all parties involved, including Nvidia's future with AI accelerators. The remaining $12.5 billion will be used to purchase Nvidia chips, which xAI will rent for five years. Meanwhile, AMD, Nvidia's rival in the AI hardware market, has secured a major deal with OpenAI to be their GPU supplier, indicating a competitive landscape.
xAI's ambitious Colossus 2 project aims to raise $20 billion in funding, with Nvidia as a major investor. The project's success could significantly impact the AI hardware market, with potential benefits for both Nvidia and AMD, and could further advance AI capabilities.
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