Jensen Huang-led Nvidia Corporation (NASDAQ:NVDA) is reportedly investing as much as $2 billion in Elon Musk's AI company and Grok-parent xAI.

Jensen Huang Deepens Partnership With Elon Musk's AI Venture

Nvidia's investment is part of xAI's ongoing funding efforts, which have grown beyond initial plans to reach $20 billion, according to Bloomberg, citing people with knowledge of the matter.

xAI's funding is divided between $7.5 billion in equity and $12.5 billion in debt, the report said. This is structured through a special purpose vehicle.

The funding will be used to purchase Nvidia's GPUs, which xAI plans to deploy at “Colossus 2,” its AI data center in Memphis, Tennessee.

Musk previously said that Colossus 2 will become the world’s first Gigawatt AI training cluster.

The funding also includes participation from Apollo Global Management (NYSE:APO), Diameter Capital Partners and Valor Capital, the report noted.

xAI did not immediately respond to Benzinga's request for comments. Nvidia declined to comment.

See Also: Tesla Robotaxi Downloads Outpace Uber By 40% On Apple's App Store Amid Ease Of Self-Driving Regulations

Musk-Led xAI's Rapid Growth And Heavy Spending

In July earlier this year, xAI secured $10 billion in debt and equity financing. In September, Musk denied reports that the startup was raising another $10 billion in funding at a valuation of $200 billion.

However, as per the report, xAI burns through $1 billion per month, indicating that it requires funds to continue.

Later this year, Musk's EV giant Tesla Inc. (NASDAQ:TSLA) shareholders will also vote on whether the automaker should invest directly in xAI.

Price Action: Nvidia shares dropped 0.25% on Tuesday, reaching $184.04. In after-hours trading, it continues to drop, according to Benzinga Pro.

Benzinga's Edge Stock Rankings place Nvidia's Growth in the 97th percentile and Quality in the 93rd percentile, highlighting its strong standing compared to leading AI peers such as TSMC and AMD.

Read Next:

• Elon Musk's xAI Hires Trump Aide Stephen Miller's Wife Katie Amid Controversial Memphis Data Center Permit Win

Photo: gguy/ Shutterstock