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SpaceX Reportedly Plans to Raise $40 Billion to Purchase Nvidia AI Chips
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According to the Financial Times, SpaceX, the company led by Elon Musk, is planning to raise $40 billion (approximately 268.579 billion yuan) to purchase NVIDIA AI chips on a large scale. This round of financing is led by private equity group Apollo Global Management and is expected to be completed by 2027. This move indicates that SpaceX is ramping up its investment in the artificial intelligence field, betting on NVIDIA's advanced technology.
People familiar with the matter revealed that SpaceX plans to raise approximately $10 billion through bank loans and then issue $30 billion in investment-grade bonds to fund this massive chip purchase order. Pacific Investment Management Company (Pimco) is also involved in discussions to contribute funding. Thanks to its BBB credit rating β the second-to-lowest tier in the investment-grade range β insurance and pension funds are able to purchase SpaceX's bonds.
Musk had already publicly stated on the August earnings call that SpaceX would be built entirely based on NVIDIA technology. He said the company believes the Vera Rubin architecture is the most outstanding AI computing system and highly values its close collaboration and partnership with NVIDIA at multiple levels. If this round of financing is realized, the cooperative relationship between the two sides will be further deepened.
SpaceX received an investment-grade credit rating shortly after completing its $86 billion initial public offering (IPO) in June, and subsequently issued $25 billion in high-grade bonds. However, those bonds quickly faced selling pressure amid market concerns about the company's continually rising debt and enormous capital expenditures. According to MarketAxess data, SpaceX bonds maturing in 2056 are currently trading at approximately 85 cents on the dollar, with a yield about 2.27 percentage points higher than U.S. Treasuries β a level already approaching that of junk bonds.
It is worth noting that when SpaceX first approached investors to raise funds for chip purchases, it provided only a brief two-page memo featuring images of outer space and an arrow indicating a data center to be built "somewhere in the universe." This caused difficulties in securing internal approval from investors. Some investors, as a result, were unwilling to invest in SpaceX bonds.
Apollo's credit business has a total scale of $800 billion, and making loans to highly rated companies is one of its core businesses. The firm has previously led multi-billion-dollar financings for companies such as Intel and Bayer, and its life insurance subsidiary Athene typically subscribes to the majority of the bonds. In June of this year, Apollo also led a $35 billion chip financing deal, with the purchase target being processors from Broadcom, a competitor of NVIDIA.
NVIDIA itself is also expanding its financing footprint. In August of this year, NVIDIA announced the establishment of a $500 billion financing platform in partnership with top Wall Street firms including Apollo, BlackRock, Blackstone, Goldman Sachs, and KKR, aimed at purchasing NVIDIA chips and expanding AI infrastructure construction. The consortium plans to set up a third-party funding pool to help smaller clients reduce borrowing costs, and NVIDIA may provide credit backing for a portion equivalent to up to 25% of the chip value.
