SpaceX plans $40 billion debt raise to buy Nvidia chips, FT reports

This week's bond market narrative is reinforced by the deal: artificial intelligence has emerged as a key driver of corporate debt issuance. Goldman Sachs has pointed to AI-related corporate borrowing as one factor pushing US Treasury yields higher, and a $30 billion investment-grade offering from a single borrower would intensify competition for investor funds. For Nvidia, a large debt-financed order from a customer committed to exclusive use of its hardware supports demand expectations, though the muted share reaction suggests much of that is already reflected in prices. The key question for credit markets is appetite. With Morgan Stanley warning of growing caution among lenders, the pricing and uptake of this deal will serve as a useful gauge of how much more AI-related borrowing investors can absorb.

SpaceX's plan to borrow $40 billion to acquire Nvidia chips highlights how the AI boom is increasingly funded by debt.

Key points from the Financial Times report:

• The Financial Times reported that SpaceX intends to raise $40 billion for Nvidia AI chip purchases, with Apollo Global Management expected to head the financing.
• The financing package consists of roughly $10 billion in bank loans and $30 billion in investment-grade debt, with Pimco among the lenders in discussions.
• The transaction is anticipated to close in 2027.
• Following the report, SpaceX shares dropped about 1% in extended trading, while Nvidia gained about 0.5%.
• Morgan Stanley projects that AI infrastructure will require $1.5 trillion in external financing by 2028.

The Financial Times reported on Tuesday, citing people familiar with the matter, that SpaceX is seeking $40 billion to buy Nvidia AI chips, with Apollo Global Management expected to lead the financing.

According to the report, the Elon Musk-led company intends to raise roughly $10 billion via bank loans and $30 billion in investment-grade debt to finance the order. Apollo is anticipated to oversee the deal and assist in placing the debt across a diverse investor base. Bond manager Pimco is among a limited number of lenders in discussions to supply financing, with the transaction slated to close in 2027.

After the report, SpaceX shares declined roughly 1% in extended trading, while Nvidia rose about 0.5%. According to Reuters, SpaceX, Apollo and Nvidia did not immediately respond to comment requests, and Pimco declined to comment.

The chips are destined for SpaceX's AI computing activities. Before its record IPO of approximately $86 billion in June, the company had absorbed Musk's xAI, and it operates the Grok AI model via its Colossus data centers. Musk has stated that SpaceX will use Nvidia hardware exclusively in those centres and mentioned last month that the Colossus 2 facility could more than double its Nvidia chip count by December. Additionally, SpaceX leases out Colossus computing capacity to other AI developers, primarily Anthropic and Alphabet's Google.

The proposed fundraising illustrates the magnitude of capital that the AI boom now demands. Morgan Stanley projects that AI infrastructure will require $1.5 trillion in external financing by 2028, even as lenders and investors become more cautious about supporting the expansion. In August, Nvidia itself partnered with Apollo, BlackRock, Blackstone, Brookfield, Goldman Sachs and KKR on financing platforms designed to channel more than $500 billion into AI infrastructure.

The deal also comes as bond markets contend with substantial supply. Goldman Sachs has cited rising corporate borrowing for AI investment as one factor behind the recent increase in US Treasury yields, implying that large offerings like this one are being monitored for their effect beyond the technology sector.