NVIDIA Corporation (NVDA)’s Chips to be Used to Power xAI’s Colossus 2

NVIDIA Corporation (NASDAQ:NVDA) is one of the 13 best Fortune 500 stocks to invest in now.

NVIDIA Corporation (NVDA)'s Chips to be Used to Power xAI's Colossus 2

On October 16, 2025, Bloomberg reported that Elon Musk’s AI startup xAI is working on a $20 billion lease-to-own deal for NVIDIA Corporation (NASDAQ:NVDA)’s chips. These chips will be used to power xAI’s second major data center, Colossus 2, in Memphis.

xAI, unlike competitors that rely on cloud partnerships, looks to own most of its data center infrastructure directly. The deal with NVIDIA Corporation (NASDAQ:NVDA) is structurally arranged through a special purpose vehicle (SPV) created by Valor Equity Partners. The SPV will combine $7.5 billion in equity and $12.5 billion in debt to acquire the chips from Nvidia. Furthermore, an option for xAI to acquire the hardware at the end of the lease is also included.

Meanwhile, NVIDIA Corporation (NASDAQ:NVDA) will contribute $2 billion in equity to the SPV, shifting most of the financial risk to Valor while supporting xAI’s AI compute ambitions.

NVIDIA Corporation (NASDAQ:NVDA) is a global graphics, compute, and networking solutions provider, offering data center accelerated computing, AI software, networking, automotive platforms, robotics, and DGX cloud computing services.

While we acknowledge the potential of NVDA to grow, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an AI stock that is more promising than NVDA and that has 100x upside potential, check out our report about this cheapest AI stock.

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