Nvidia’s $2B Bet on xAI (Patreon)

Nvidia plans to invest up to $2 billion in Elon Musk’s xAI, part of a $20 billion funding round that mixes equity and debt. The move supports xAI’s use of Nvidia’s GPUs for its new “Colossus 2” supercomputer, helping it expand fast. It also fits Nvidia’s broader playbook—fund AI companies that buy its chips, locking them into its ecosystem.

NVDA is flat on the news

Timing vs Tesla’s Investment

Nvidia’s deal is expected to close before Tesla’s potential investment. Tesla shareholders will vote in November 2025 on whether to allow up to $5 billion in funding for xAI, but that’s just an exploratory proposal. xAI’s current funding round is nearly finished, so Nvidia’s stake will likely finalize first.

Why It’s a Hedge Against OpenAI Risks

This is Nvidia’s way to diversify beyond OpenAI, where it recently committed around $100 billion for data centers. OpenAI’s success has boosted Nvidia, but it also faces risks like regulations or internal issues. Backing xAI—Musk’s “truth-seeking” AI venture tied to X —helps Nvidia spread its bets. If OpenAI stumbles, which I am pretty sure it will, xAI could fill the gap, keeping demand strong for Nvidia’s chips in the trillion-dollar AI race. Rem winner take most in this space.

$NVDA now has taken equity stakes in: - OpenAI - xAI - $NBIS Nebius - $CRWV CoreWeave - $INTC Intel - $ARM