Musk's xAI Taps Nvidia and Others to Raise $20 Billion

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Transcript

00:00I want to get across to the latest story on NVIDIA. Ed Ludlow breaking some news

00:04in the last 24 hours. That news now confirmed by the man himself, Jenson Wank, at NVIDIA.

00:09Ed joins us now for more. Ed, what's the latest? Just go through your reporting and what you've

00:13been learning. Yeah, the structure is really important. So XAI needs a way to finance the

00:18GPUs for its data centers, Colossus 2 particularly in Memphis. They've set up a special purpose

00:25vehicle with this pool of investors. The target is to raise $20 billion for the SPV, $12.5 billion

00:33of debt, the remainder in equity. And essentially, the investor pool buys the GPUs. And XAI leases or

00:42rents them over a period of five years. In this case, what Jenson Wank has just confirmed in another

00:49network is that they are participating. Our reporting was that NVIDIA would put $2 billion

00:55into the equity chunk of the SPV. And what Jenson Wank was saying in that interview is that he

01:02regrets he couldn't put more money into it. He said it's not venture financing, nor is it vendor

01:08financing per se. But I'd say that's as close to a sort of ironclad confirmation as we're going to get.

01:15Because the whole point of an SPV, as you know, John, is usually the participants do so because they

01:21want it to be discreet. You know, you're not... Just to jump in, buddy, I don't want to be

01:25competitive about this. But Jenson Wank doesn't get to decide what it is. That's what it is.

01:29Right. Yeah, it is what it is. That's what it looks like. That's what it smells like. That's what

01:34it is. Now, Ed, I understand what they get out of it, because that vehicle is going to buy ultimately

01:39what NVIDIA provides. What do the other investors get out of it? Yeah, so I think there's still a lot of

01:46reporting to do on whether they end up with any XAI shares. But you basically get guaranteed returns,

01:52right? XAI doesn't take the debt burden onto its own balance sheet. But because XAI is funneling

01:59lease fees to this pool of investors, they are getting guaranteed pay. Although, you know,

02:05the specifics on the payment schedule we don't have yet. But the main point, John, is like the GPUs

02:12are a very big initial upfront capital expenditure. But they're also a depreciating asset, in part

02:18because in a year's time, the generation of chip that's installed will be obsolete anyway.

02:22But they lose their value over time. And so the investor pool know how much they're going to get

02:27paid back, be it monthly or quarterly or whatever. And all told, they can then work out later what to

02:35do with those then obsolete chips.