Elon Musk’s SpaceX is seeking $40 billion in fresh financing to buy Nvidia chips as the AI infrastructure spending binge grows ever more expensive.
According to the Financial Times, the proposed package would include about $10 billion in bank loans and $30 billion of investment-grade debt.
Apollo Global Management is expected to lead the financing and help distribute the debt among investors, while bond giant Pimco is among those examining the deal.
The talks remain in the early stages and could still end without an agreement. If completed, the transaction is expected to close in 2027. The eye-watering sum will principally fund purchases of Nvidia processors as SpaceX expands the computing infrastructure supporting its AI operations.
Musk has already nailed SpaceX’s colours firmly to Nvidia’s mast, saying the company intends to use Nvidia hardware exclusively for its data centres. He has praised Nvidia’s Vera Rubin architecture as the best available AI computing platform, which is convenient as it prepares to borrow $40 billion to buy enormous quantities of it.
SpaceX’s growing appetite for processors reflects the increasingly uncomfortable economics behind the AI boom. Companies need vast numbers of accelerators, followed by data centres, networking equipment and enough electricity to make several national grids develop nervous twitches.
Morgan Stanley estimates that the industry will require roughly $1.5 trillion of financing for AI infrastructure by 2028. SpaceX carries a BBB credit rating, allowing insurance companies, pension funds and other investment-grade buyers to participate in its debt issues.
Investors have nevertheless begun paying closer attention to the company’s rapidly expanding debt pile and relatively limited financial disclosure.
Some existing SpaceX bonds have fallen in value as investors have become less comfortable with its borrowing, despite the investment-grade rating.
The financing would deepen the relationship between SpaceX and Nvidia at a time when securing enough high-end processors has become one of the largest expenses facing companies building AI infrastructure.
Nvidia has a clear interest in ensuring customers can find the money needed to keep buying its increasingly expensive silicon. The chipmaker has been working with Apollo, BlackRock, Goldman Sachs and other financial groups on programmes intended to mobilise hundreds of billions of dollars for AI infrastructure.
Apollo is becoming increasingly active in financing semiconductor and AI infrastructure deals and has previously arranged large funding packages involving chip companies. The proposed SpaceX transaction would be one of the largest examples yet of debt markets being tapped directly to fund the AI hardware buildout.
At $40 billion, the prospective financing demonstrates that the AI industry’s shortage is no longer confined to processors. Apparently it needs industrial quantities of borrowed money too.
