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

What’s going on here?

The Financial Times (FT) reported on October 6 that SpaceX is seeking $40 billion to buy chips from Nvidia, calling it a blockbuster debt deal. According to Seoul Economic Daily and Analytics Insight, which cite the FT, private equity firm Apollo Global Management is expected to lead the financing, made up of about $10 billion in bank loans and $30 billion in bonds. Bond giant Pimco is reportedly among a small group of lenders in talks. The deal is expected to be completed in 2027. SpaceX has not publicly confirmed the plan, and none of the terms are final.

What does this mean?

The size of the request shows how expensive the race to build artificial intelligence has become. SpaceX, which folded Elon Musk's AI venture into the company, has tied its AI plans closely to Nvidia. At an earnings briefing in August, Musk called Nvidia's newest platform, Vera Rubin, the best AI computer available and said SpaceX would adopt it across its operations, according to Seoul Economic Daily. He also expects the number of Nvidia chips at the Colossus 2 facility to potentially double or more before the end of the year, Analytics Insight reported.

Borrowing, rather than selling new shares, is the notable choice. SpaceX won an investment-grade credit rating soon after its June stock market debut, which Analytics Insight put at $86 billion. Its BBB rating, the second-lowest rung of investment grade, means insurers and pension funds are allowed to buy its bonds. That opens a very large pool of money. But it also means more debt on a company that is already spending heavily.

Bond investors have shown some unease. SpaceX sold $25 billion of bonds after its listing, and prices on that debt have since fallen on worries about rising borrowing and capital spending, according to Seoul Economic Daily. The extra yield those bonds pay over US Treasurys widened to about 2.27 percentage points, a gap the outlet described as comparable to junk bonds, the riskier tier below investment grade.

The deal also fits a wider pattern. By 2028, AI infrastructure may require $1.5 trillion raised from outside backers, according to a Morgan Stanley estimate cited by Analytics Insight. Nvidia itself is teaming up with Apollo, BlackRock and KKR on vehicles aiming to gather over $500 billion for AI projects around the world. Private credit firms such as Apollo are becoming central lenders to the AI boom.

The bull case

A committed $40 billion order would underline demand for Nvidia's most advanced chips well into 2027. For SpaceX, securing financing at investment-grade rates could let it expand computing power faster than rivals without diluting shareholders. Strong appetite from large lenders such as Apollo and Pimco would also signal that credit markets remain willing to fund the AI build-out.

The bear case

Adding $40 billion of debt on top of $25 billion already issued raises leverage at a company whose existing bonds have weakened. If AI revenue grows more slowly than spending, lenders and shareholders could both suffer. Talks are at an early stage and could fail. And heavy borrowing across the sector concentrates risk if the AI boom cools.