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SpaceX Seeks to Raise $40 Billion to Buy Nvidia Chips, Apollo Leads Funding Round
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- DeepHorus
SpaceX is seeking to raise approximately $40 billion through a financing initiative led by private equity giant Apollo Global Management, to fund a large-scale purchase of NVIDIA chips in support of the expansion of its artificial intelligence-related infrastructure. According to people familiar with the matter, the financing plan includes approximately $10 billion in bank loans and $30 billion in investment-grade bonds, and is expected to be completed in 2027. This heavyweight deal once again underscores the enormous capital requirements for chip and infrastructure investments in the AI field.
Specifically, Apollo is expected to lead the initiative and help sell these bonds to a broad group of investors, with bond investment firm Pimco being one of the few lenders involved in discussions that may provide funding. Because SpaceX holds a BBB credit rating β the second-lowest tier among investment-grade ratings β insurers and pension funds will be able to purchase its bonds, whereas such funds typically have far more limited allocations to junk-rated bonds. Apollo and Pimco both declined to comment, and SpaceX and NVIDIA did not immediately respond to requests for comment.
The deal will further strengthen the partnership between SpaceX and NVIDIA. Musk explicitly stated during SpaceX's earnings call in August that the company has decided to build entirely on NVIDIA technology because the Vera Rubin architecture is the best architecture. He emphasized that this is the best AI computer, and that the company places great importance on its close collaboration and partnership with NVIDIA at multiple levels. This is also a significant victory for NVIDIA, which is facing increasingly fierce competition from other chip manufacturers.
SpaceX's financing history has not been smooth. The company received an investment-grade rating shortly after its initial public offering at $86 billion in June, and then issued $25 billion in high-grade bonds less than two weeks later. However, due to investor concerns about its growing debt and high capital expenditures, these bonds were sold off in the days that followed. According to MarketAxess data, its bonds maturing in 2056 currently trade at approximately 85 cents on the dollar, with a yield approximately 2.27 percentage points above U.S. Treasuries, approaching junk bond levels.
Musk's limited financial disclosures have in the past made some investors cautious about purchasing SpaceX debt. Investors who were approached by SpaceX to discuss financing said they received only a brief two-page deal memo, accompanied by space imagery, with arrows indicating the company's plan to build data centers "somewhere in the universe." One investor put it bluntly: "How could we possibly take something like this to the investment committee?"
From an industry trend perspective, this deal is the latest snapshot of the AI infrastructure financing wave. Apollo has made lending to high-grade companies a core pillar of its $800 billion credit business, having completed billions of dollars in financings for groups such as Intel and Bayer, and its life insurance and annuity business affiliate Athene typically purchases a large portion of such issuances. In June, Apollo also led a $35 billion chip financing deal to purchase processors from NVIDIA competitor Broadcom, setting the record at the time for the largest private credit transaction.
Additionally, NVIDIA announced in August that it is partnering with major Wall Street institutions to build a $500 billion financing platform, having signed memoranda of understanding with Apollo, BlackRock, Blackstone, Brookfield, Goldman Sachs, and KKR. The consortium aims to establish a pool of third-party capital to finance the purchase of NVIDIA chips and broader AI infrastructure construction, with NVIDIA potentially providing support for amounts up to 25% of chip value. If SpaceX's $40 billion financing plan moves forward smoothly, it will become yet another landmark case within this grand ecosystem.
