Nvidia Invests $2 Billion in Elon Musk's AI Startup xAI
Nvidia has announced a significant investment of up to $2 billion in Elon Musk's AI startup, xAI, as part of a $20 billion funding round. The investment aims to support xAI's 'Colossus 2' data center project in Memphis.
Nvidia, led by CEO Jensen Huang, has witnessed a surge in demand for AI hardware this year. The company's data center business contributed a substantial $41.1 billion to its revenue, with targets set to reach $54 billion in the current quarter.
The investment is structured through a special vehicle that will lease Nvidia GPUs to xAI, making Nvidia a direct infrastructure partner for major AI players. This strategic move comes despite Nvidia's dominance in the nvda stock market, with a market capitalization of $4.5 trillion and a record revenue of $46.7 billion in the second quarter of fiscal year 2026, a 56% increase from the previous year. The booming AI chip market, currently valued at $28 billion and expected to grow to almost $283 billion by 2032, has not been hindered by a sales ban on certain chips to China.
Nvidia's stock jumped over 2% following the announcement, breaking a three-day losing streak. With a market share in data center GPUs of over 90%, the company continues to solidify its position in the nvidia stock chip market. The investment in xAI's 'Colossus 2' project is expected to further strengthen Nvidia's infrastructure partnerships and drive growth in the AI hardware sector.
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