SpaceX seeks $40 bln for Nvidia chips to expand AI infrastructure

Elon Musk's SpaceX is in talks to raise about $40 bln to purchase advanced Nvidia chips and further expand AI infrastructure. If completed, the deal would become one of the largest debt packages directly tied to the purchase of hardware for artificial intelligence.

According to the Financial Times, the company is considering raising approximately $10 bln in bank loans and another $30 bln via investment-grade debt securities. Apollo Global Management is expected to lead the financing, helping place the debt among a broad range of investors.

Pimco, one of the world's largest bond asset managers, is also named as a potential lender. The deal is planned to close by 2027. SpaceX, Apollo, and Nvidia have not publicly commented on the terms of possible financing as of now.

The massive capital raise is linked to SpaceX's sharp increase in computing power. Musk has previously said the company plans to use Nvidia hardware for its data centers, and that the capabilities of the Colossus 2 complex could grow substantially by year-end.

The new deal also shows how capital-intensive the global AI race is becoming. Morgan Stanley estimates that by 2028, AI infrastructure development may require about $1.5 trillion in external funding. Money is needed primarily for chips, data centers, electricity, and network infrastructure.

In August, Nvidia, together with Apollo, BlackRock, Blackstone, Brookfield, Goldman Sachs, and KKR, created financial platforms aimed at eventually mobilizing over $500 billion of third-party capital for AI infrastructure. The idea is to turn expensive computing equipment and data centers into a distinct asset class accessible to large institutional investors.

For SpaceX, the new borrowings will extend its rapid build-up of debt financing. As reported by Kurs Ukraine, the largest tech companies, including SpaceX, have already raised hundreds of billions of dollars through bonds since the start of the year to fund AI projects.

At the same time, the market has begun demanding a higher risk premium from SpaceX. After the debut placement of its ten-year bonds, the spread over U.S. Treasuries widened noticeably. The new multibillion-dollar package will test how willing investors are to continue financing the company's rapid ramp-up in AI spending.

Following reports of the talks, SpaceX shares fell about 1% in over-the-counter trading, while Nvidia added about 0.5%.

Based on: Financial Times, Reuters, Nvidia